Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

PRIVATE BUSINESS

CITY OF LONDON (WARD ELECTIONS) BILL (By Order)

Order for consideration, as amended, read.

To be considered on Thursday 8 July.

Oral Answers to Questions — HEALTH

The Secretary of State was asked—

Mental Health Services

1. Mrs. Joan Humble: What improvements he proposes to make to the quality and provision of mental health services. [88237]

The Parliamentary Under-Secretary of State for Health (Mr. John Hutton): The Government are determined to raise both the quality and provision of mental health services. We have already set that in motion by investing significant additional resources in this financial year, and for the next two years, amounting to £700 million, and we have made mental health a clear priority for both the national health service and social services. We have initiated a thorough review of the legislation to underpin the provision of care and treatment, and we are about to publish a national service framework to address unacceptable variations in service delivery.

Mrs. Humble: May I thank my hon. Friend for that reply and welcome the additional resources to be made available for mental health? I welcome also yesterday's announcement of the Nye Bevan award for mental health services in Dewsbury. However, as I am sure my hon. Friend is aware, there are excellent mental health services in other parts of the country. In Blackpool, along the Fylde coast, there have been exciting developments in child and adolescent psychiatry. A new day centre has opened and new family support workers have been appointed.
I wish to draw to my hon. Friend's attention the difficulties that my local community trust is having in recruiting and appointing a new consultant to deal

especially with child psychiatric problems. I am well aware that he has inherited from the previous Government a substantial shortfall in trained staff—

Madam Speaker: Order. A question, please.

Mrs. Humble: Can my hon. Friend offer me reassurances about the training and recruitment of staff, especially in child psychiatry, which is such an important area?

Mr. Hutton: I can certainly reassure my hon. Friend about that. I remind the House that the Government have committed £90 million over the next three years to improving the provision of child and adolescent mental health services, which have been neglected in the past and which can play an important role in improving mental health services. My hon. Friend is right to draw attention to some of the problems in recruiting staff in a specialist area. She may be reassured to know, for example, that between 1997 and 1998, there has been a nearly 8 per cent. growth in the number of consultants in the psychiatry specialty group. The numbers in general psychiatry are expected to double from about 150 to 300. We are trying to address these problems. It is important that we succeed in doing so because these services are extremely important.

Mrs. Virginia Bottomley: I think that the Minister will know how strongly I believe that additional priority should be given to mental health services. May I ask him again to look at how funding has affected the home counties? In Surrey, there is no money to recruit or employ people and there have been cuts across the board. At a time when policy soundbites are good, it is particularly dispiriting for those who are involved in the service not to have the wherewithal to embark on the necessary improvements.
Will the Minister take forward the commitment that he gave in an Adjournment debate last week to ascertain what more he could do to help Cruse Bereavement Care? This is a day when prevention will be discussed. It seems that prevention in the area of mental health can be provided by assisting the voluntary organisations that help those undergoing bereavement. There could not be a better organisation than Cruse to do that.

Mr. Hutton: I can reassure the right hon. Lady. She will know that I am meeting the chief executive of Cruse tomorrow to discuss her concerns and how the Government can better support the provision of bereavement services throughout the country. I remind the right hon. Lady that the £90 million to which I referred represents additional resources for child and adolescent mental health services, which will be distributed fairly throughout the country. I point out again to the right hon. Lady and to other Surrey Members, who raise these issues regularly with me, that both local authority social services and the national health service in Surrey have received real-terms increases in their allocations this year. At some point, the right hon. Lady might begin to acknowledge that fact.

Dr. Brian Iddon: In Bolton, mental health providers are being used to train people who are working for the pilot new deal scheme for the disabled. Jointly with the local authority, specialist helpers


have been recruited to help people with mental health problems to get a job. Once they have obtained a job, the helpers are there to support them. Does my hon. Friend agree that joint working of this kind is the way forward for the benefit of our citizens?

Mr. Hutton: I certainly do. My hon. Friend will probably be aware that there are initiatives in the north-west to try to provide better services for people with mental health problems to assist them in getting back into work and in retaining employment. We do not intend to let people with mental health problems slip through the net. We want to provide better services to support them in employment and to help those who fall out of employment.

Waiting Times

2. Mr. Michael Fabricant: If he will make a statement on waiting times from GP referral to in-patient admission in the South Staffordshire health authority area. [88238]

The Minister of State, Department of Health (Mr. John Denham): The Department has never collected data on patients' total waiting time from general practitioner referral to in-patient admission. However, I am pleased to say that during 1998–99, in-patient waiting lists in South Staffordshire fell by 2,233. Lengthy waits of over nine months fell by 7 per cent.

Mr. Fabricant: It is not waiting lists but waiting times that count. I found out in January that patients hoping to go to the Good Hope hospital have to wait twice as long if they live in the South Staffordshire health authority area as people who live in Birmingham, for treatment for exactly the same clinical problem. I wrote to the Department of Health in January, and eventually got a reply in March from Baroness Hayman. She agreed that it was an anomaly and that it was wrong, and she stated that she had therefore asked her officials
at the West Midlands Regional Office of the NHS Executive to meet with the Health Authorities and Trust to see if there is scope for improving waiting times".
Since then, I have heard nothing, despite writing. Surprise, surprise, I got a letter today—

Madam Speaker: Order. We have had a very bad start to questions. These are really Adjournment debates. Will the hon. Gentleman put his question to the Minister now?

Mr. Fabricant: Thank you, Madam Speaker.
The letter today stated that there would be no change. My question is this: is it morally right that someone suffering from an illness who happens to live in one postcode area has to wait twice as long to go to the same hospital as those with exactly the same complaint who live in a different postcode area? Is that right or is it wrong?

Mr. Denham: One of the things that we must tackle is the unacceptable variations in access to treatment and care, which were the legacy that we inherited from the fragmentation and divisiveness of the previous Government. May I say to the hon. Gentleman and

his constituent that in drawing a comparison with Birmingham, the hon. Gentleman is drawing a comparison with one of the five best performing health authorities in the country. Birmingham has the shortest waiting times for patient treatment and the shortest lists per head of population. It should be congratulated on that. The median waiting time for in-patient treatment at the Good Hope hospital is just under 12 weeks. For South Staffordshire, it is between two and three weeks longer than that.

Dr. Liam Fox: When will the Minister produce the figures that matter to patients in South Staffordshire, as my hon. Friend the Member for Lichfield (Mr. Fabricant) mentioned, and publish the waiting times from referral by their GP to their actual treatment?

Mr. Denham: The reason why this Government have not collected the figures from GP referral to in-patient admission is, I believe, the same reason why the previous Government did not do so: not all GP referrals end up with an in-patient admission, so that would not provide a meaningful statistic about the health service. I remember that under the previous Government, of whom the hon. Gentleman was a member—I should have congratulated him on his new appointment—many, many people waited longer than 18 months for treatment. For nine months in a row, there have been no reports of people in the NHS having to wait for 18 months.

Dr. Fox: The constituents of my hon. Friend the Member for Lichfield (Mr. Fabricant) will have learned from the Minister what the true position is. The Government will not collect the figures because they know that they are creating waiting lists for waiting lists. When one adds the number of patients waiting to wait to the number of those actually waiting, one gets a much bigger number than the Government's fiddled figures. The Secretary of State promised to give us the figures back in September. The Minister is in charge of a health service in which junior doctors are betrayed, the British Medical Association says that morale is at an all-time low, complaints are up and confidence is down. The truth is that health is getting worse under Labour.

Mr. Denham: That is simply not true. The hon. Gentleman makes claims about fiddled waiting list figures. He knows that the only change that this Government have made in the collection and publication of waiting list data is that we publish the information far more often than the previous Government did. As waiting lists come down—and they have come down—waiting times are coming down as well.

Accident and Emergency Wards

Dr. Vincent Cable: What progress has been made in reducing waiting times in accident and emergency wards in London hospitals in the past two years. [88239]

The Minister of State, Department of Health (Mr. John Denham): More than £15 million is to be invested in A and E schemes across London hospitals for 26 accident and emergency departments. The money will help to ensure that long waits are tackled through the introduction of admission wards, special areas for


children, the appointment of more emergency nurse practitioners and new initiatives such as direct links with general practitioner surgeries.

Dr. Cable: Is the Minister aware of the absolutely critical situation in south-west London, particularly at the West Middlesex and Kingston hospitals, which is manifested in large numbers of overnight stays and longer waits? Although we appreciate the programme of additional works that the Government are contemplating, will he consider an emergency programme designed to increase the number of beds in the hospitals so that the accident and emergency wards do not simply become annexes to the hospitals and chronically overcrowded as a result?

Mr. Denham: I am sure that the hon. Gentleman would acknowledge that one of the A and E departments covered by the investment to which I have referred is at Kingston hospital, which will receive £2 million for accident and emergency redevelopment. That is, by some way, the largest sum for any London hospital. The way in which the accident and emergency money will be invested across London depends very much on what will make the biggest impact on the quality of service in each hospital. In four cases, X-ray facilities will be improved. In five cases, facilities such as medical assessment units or observation wards will be improved, which will reduce the waiting times for admission. In other cases, there will be additional treatment rooms or cubicles. We are taking the appropriate measures in each of the hospitals concerned to make the biggest possible impact on accident and emergency waiting times.

Mr. Philip Hammond: Does the Minister agree that matters will improve in London's accident and emergency departments only with the support and collaboration of the junior doctors who work in them round the clock? Is it not obvious from the proceedings of the British Medical Association conference this week that the Secretary of State has forfeited the confidence of junior and senior doctors? Would it not be in the best interests of the national health service in London if he were to let someone else rebuild that confidence?

Mr. Denham: I am pleased to pay tribute to junior doctors and the role that they play in our hospitals; I met them recently and we had constructive discussions. I am as anxious as they are to ensure that improvements continue to be made in their working conditions and working hours, and in the other matters that affect the conditions of their rest periods. That is a promise that we are determined to see through. My right hon. Friend has led on it since he became Secretary of State and we shall continue to honour it.

HIV Services

Dr. Jenny Tonge: What steps he plans to take to encourage commissioners of HIV services to agree longer-term contracts with the voluntary sector. [88240]

The Minister for Public Health (Ms Tessa Jowell): We fully accept the importance of providing stability for voluntary sector providers of HIV services through longer-term rather than year-on-year contracts. Many authorities, especially in London and other cities, are working with consortiums to place three-year contracts with their voluntary sector providers. We welcome that. I have asked that this issue also be looked at particularly by the HIV-AIDS strategy steering group.

Dr. Tonge: That is all very well, but I am sure that the Minister agrees that voluntary organisations have played a huge part in the containment of HIV in this country. They still have an important part to play, but many of them did not know their financial situation until well into the year and they simply cannot plan. According to the curiously named Home Office document, "Compact on Relations Between Government and the Voluntary Sector", it is
good practice to give voluntary organisations early and transparent information".
The White Paper says that annual contracts are bad practice, so when will we have action instead of pronouncements?

Ms Jowell: I pay tribute to the voluntary sector in the HIV-AIDS field; it makes a vital contribution to the care and support of people with AIDS and HIV. The HIV strategy document will be issued for consultation next spring, and we are determined to deal with the problems faced by the voluntary sector by replacing annual contracts with longer-term contracts to ensure that its work has the stability that is so important for the people whom it serves.

Health Service Investment

Mr. Keith Darvill: What the planned level of capital investment in the national health service is over the next three years. [88241]

The Secretary of State for Health (Mr. Frank Dobson): More than £8 billion of capital investment is planned for the national health service over the next three years. Since we won the election, work has begun on 17 major new hospital projects, and more will be announced shortly.

Mr. Darvill: I thank my right hon. Friend for that reply. The planned investment will go some way towards addressing the chronic lack of capital investment in our precious asset, the national health service. Does the investment to which he referred include the new PFI-funded hospital at Oldchurch Park, Romford, recommended in the Turnberg report? What a wonderful birthday present that would be for my constituents on the 51st anniversary of the national health service.

Mr. Dobson: I do not want to anticipate any announcements that may be made tomorrow, but I think that my hon. Friend's constituency will be getting a birthday present.

Mr. Simon Hughes: Why do the public think that things in the NHS are not getting any better even after the Government


have been in office for two years? Many of the staff in the NHS think that things are getting worse. Is it because, for the first two years, there was no more investment than there was under the Tories? Or is it because the Government are going down the PFI route far more enthusiastically than the Tories ever did, selling off assets in the biggest privatisation in the history of the health service? In the words of the editor of this week's British Medical Journal, the Government are at risk of leaving the NHS as a rump service. Could that be the reason?

Mr. Dobson: The editor of the British Medical Journal is talking just as much claptrap as the hon. Gentleman. The hon. Gentleman should be grateful for the amount of capital that the Government have put into the services in his constituency at Guy's and St. Thomas's hospitals, where building works have already started on massive improvements in the services for the people whom he purports to represent. On top of that, we are building a new medical school.

Mr. Richard Burden: Is my right hon. Friend aware that, later today, representatives of the University Hospital Birmingham NHS trust will be talking to the Birmingham group of Labour MPs about its plans and proposals for a new hospital in the south of Birmingham? Does he agree with me that, although the staff at the Queen Elizabeth and Selly Oak hospitals provide a first-class service, all too often they work in totally unsatisfactory conditions as a result of neglect during 18 years of Tory rule? There is a serious need to improve the condition of our hospital stock in south Birmingham, so it is important that the current consultation reaches a successful conclusion as quickly as possible.

Mr. Dobson: I agree that it is a disgrace that dedicated professionals in many parts of the national health service are expected to work in deplorable conditions with unreliable equipment that no other professional group would tolerate for five minutes. These problems cannot be put right immediately, but since we got in, we have started on 17 major new hospital projects and more will be announced. We are putting billions of pounds into improving existing hospitals. This year, £350 million is already earmarked for improving equipment, because it is a disgrace that staff constantly have to use equipment that goes on the blink or breaks down because it is out of date. I am glad to say that we shall also be using more than £100 million from the national lottery to provide more reliable and up-to-date equipment for cancer diagnosis and treatment.

Dr. Liam Fox: In assessing the funds available for capital investment in the next three years, what account has the Secretary of State taken of revenues generated under the Road Traffic (NHS) Charges Act 1999? Is it true that not a penny has so far been handed over? If it is not true, how much has been handed over?

Mr. Dobson: First, I welcome the hon. Gentleman to his new job. He is the fourth shadow Secretary of State for Health that I have faced. Hereinafter we shall refer to him as Liam IV.
Pathetic sums of money were being raised under the arrangements that we inherited from the previous Tory Government. The new system has been in operation for just two months, so we have not yet received the first quarterly report on progress. As Tories ought to know by now, generally speaking, a quarter of a year involves three months.

Dental Services

Helen Jackson: If he will make a statement on the number of dental patients treated under the national health service each month. [88242]

The Minister of State, Department of Health (Mr. John Denham): About 3 million people in England complete a course of dental treatment in the general dental service each month. That means that more than 3 million visit NHS dentists each month, because many will visit more than once during the month.

Helen Jackson: Is my hon. Friend aware that dental practices in some areas—such as Stocksbridge, quite a large town in my constituency—have withdrawn the facility for adults to receive NHS dental treatment, and have told them to use a private contributory scheme? A filling costs £25, and an extraction £30. People are left with the choice between doing that and paying the £3 bus fare to Sheffield to obtain NHS treatment.
Has my hon. Friend any plans to enhance the role and powers of health authorities, which are very concerned about the position, so that they can intervene and offer loyalty bonuses and other incentives to practices that continue to offer NHS treatment, and, perhaps, ensure that practices do not cause patients inconvenience of this kind?

Mr. Denham: Although the number of NHS dentists has risen, as has the number of treatments carried out under the NHS, access to NHS dentistry is unsatisfactory in some parts of the country. I am aware of the problem in Stocksbridge. The Government have introduced two measures designed to enable health authorities to cope with the difficulties. The investing in dentistry scheme, which ran until April this year, will enable an extra 650,000 patients to register for NHS dental treatment, and the personal dental services schemes—of which there are many throughout the country—provide a more flexible way of allowing access to NHS dentistry. It is important for health authorities to take full advantage of those initiatives. Sheffield made no proposals under either scheme; I do not know why, but I urge my hon. Friend to encourage her health authority to make the best possible use of the Government's mechanisms to support NHS dentistry.

Mr. James Gray: Our experience in North Wiltshire is very similar to that of the hon. Member for Sheffield, Hillsborough (Helen Jackson). We had three NHS dentists when the Labour party came to power; all three have since gone out of business, and Chippenham, a prosperous town with a population of 30,000, has no NHS dentists at all.
The Minister just suggested that the investing in dentistry scheme had ended in April. That contradicts a letter that I received from him recently in reply to an application by Dr. Hazlem, who is trying to set up a new


practice in Chippenham. We were told very recently that that letter was being considered, and that the Government might well provide Dr. Hazlem with the IID funds that he had requested. Is the Minister now changing his mind, and has the IID scheme been run down?

Mr. Denham: The investing in dentistry scheme closed to new applications on 23 April, but a number of applications—including, I believe, that of the hon. Gentleman's constituent—are still being considered under that procedure. We are looking for the best ways to continue our support for NHS dentistry, and will publish an NHS dentistry strategy later this year.

Cancer Summit

Dr. Ian Gibson: What progress he has made in implementing the action plan agreed at the cancer summit meeting in May. [88243]

The Secretary of State for Health (Mr. Frank Dobson): Work is under way to implement the action plan agreed at the Prime Minister's cancer summit in May. The Medical Research Council is bringing together major funders of cancer research to consider how research can be better co-ordinated. National standards and performance indicators are still being developed as part of the implementation of the Calman-Hine approach introduced by the previous Government. A director of the cancer action team will take up a post in July. We hope that, as a result of those measures, we shall ensure that the standards of diagnosis and treatment of cancer that currently apply in the best units apply in every part of the country.

Dr. Gibson: The cancer summit at Downing street clearly threw down the gauntlet in regard to tackling and improving our dreadful cancer statistics. The all-party group on cancer has issued five policy pledges, which I have here. Will my hon. Friend congratulate the Cancer Research Campaign, which today launched an anti-tobacco research and surveillance unit to chase and harry the tobacco giants as they try to flout the advertising laws? Will he ensure that no doctor has to stand in front of a patient ever again and say, "I cannot give you the drugs to cure and treat your cancer because the health authority refuses to pay for them"?

Mr. Dobson: I generally welcome the actions of the Cancer Research Campaign—even, occasionally, when it asks for more money. I certainly welcome what it is doing in relation to tobacco. Every year, the tobacco industry has to recruit 120,000 people to make up for the 120,000 who are killed by following the makers' instructions on the packets in which the tobacco companies sell the cigarettes. They usually target that effort at children because most people start smoking when they are children. Anything that we can do to counter what they have been doing is to be welcomed. There is clear evidence that, almost 20 years ago, they were looking at ways of countering the possibility that tobacco advertising might be banned.
Tobacco advertising will be banned here from December; we will be the first in Europe to ban it, of which we are proud. [Interruption.] Whatever the mutterings from the Conservative party, we were glad that we stopped

being part of the group that obstructed the introduction of an anti-tobacco advertising directive throughout Europe. We are glad that we have led the way in banning tobacco advertising, because tobacco smoking is the principal cause of the inequalities in health among adults in this country. Seventy per cent. of the deaths of working-class people, over and above what one would expect among middle-class people, are the result of smoking.

Mrs. Marion Roe: Is the Secretary of State's pledge to introduce a maximum two-week waiting time for breast cancer treatment due to be met on schedule? What representations has he received regarding the clinical necessity of such a policy?

Mr. Dobson: I do not yet have the reports, but, so far as I know, we expect the target to be met in most places; I hope that it will be met in all places. Some clinicians have doubts about the target, but others have welcomed it. We believe that it is right and proper to set those targets, particularly because women are naturally extremely perturbed if they are referred by their general practitioner for urgent examination and diagnosis by a cancer specialist when it is suspected that they may have breast cancer. We were advised by the then chief medical officer that a two-week target was reasonable.

Mr. Hilton Dawson: May I congratulate my right hon. Friend again on his wisdom and intelligence in selecting the breast cancer service that is based at Royal Lancaster infirmary to be a national health service beacon? May I assure him that his judgment is sound? It is an excellent service. It will go from strength to strength, given the confidence that he and his Department have shown in it.

Mr. Dobson: I always welcome the odd compliment, as we get so much abuse—although, on reflection, I have concluded that we get far more abuse in the newspapers than we ever do in the House of Commons. As my hon. Friend knows, I was pleased to be at the new unit in Lancaster, where there was a good partnership between the clinicians, other people from the NHS, social services and the Macmillan organisation to provide a better service, which backs up the extended service that is available nearby in Preston.

Dr. Evan Harris: As vice-chairman of the all-party group on cancer, may I reassure the Secretary of State that none of the five sensible pledges for the comprehensive cancer strategy is described as an early pledge so Liberal Democrats hope that they be may implemented. But how can the Secretary of State implement any strategy on cancer without considering staffing? Is he aware that any expansion in the breast screening programme may be held up by a shortage of qualified radiologists, who are terrified to enter a sector where they are liable to be condemned by Ministers for errors in the service? Up to half of cytology screening units have lost their quality accreditation and his Department is still sending out redundancy notices to qualified, ready-to-be-consultant gynaecologists, when women are dying as a result of inadequate gynaecological cancer services.

Mr. Dobson: I know that the hon. Gentleman is a doctor, but I noticed a quick shift in his question from radiology to obstetrics and gynaecology. Certainly I am very well aware that we do not have sufficient radiologists to do the work that we should all like to be done. [Interruption.] I cannot imagine why any Tory Member is yakking about that. When they were in office, not enough radiologists were taken on, trained and subsequently made consultants. We want not only to try to make maximum use of the radiologists available but to recruit and train more radiologists as soon as possible. As I said, in some cases, we want to use lottery money—in other cases, just plain NHS money—to improve diagnostic equipment and make it more reliable. That would be good for patients and staff.
The hon. Gentleman seemed to suggest that all the cancer screening incidents in which things have gone wrong have not in any way been the responsibility of some of the individuals concerned. However, even some doctors have to take responsibility in those circumstances. If the independent panels that have been established to look into those matters criticise the doctors involved, I think that I am entitled to endorse that criticism.

Mrs. Caroline Spelman: The gimmickry of the Prime Minister's cancer summit brings no comfort to cancer sufferers denied access to modern cancer drugs such as Taxol and Tamoxifen. Will the right hon. Gentleman ensure that, as a result of the work of the National Institute for Clinical Excellence, further rationing of those drugs is prevented?

Mr. Dobson: I welcome the hon. Lady to her job. If she had asked anyone who attended the Prime Minister's cancer summit, she would know that none of them thought that it was a gimmick, and that, afterwards, they all praised it. I would rather take my cue from them than from the Tory party. I confirm that Taxol is likely to be one of the highest-priority drugs for consideration by NICE. If the institute advises that it should be rolled out across the country, rolled out it will be.

Teenage Pregnancy

Shona McIsaac: If he will make a statement on the level of teenage conception and pregnancy in the South Humber health authority area. [88244]

The Minister for Public Health (Ms Tessa Jowell): In 1997, the conception rate for under-20s in South Humber health authority area was 81 per 1,000, compared with an average for England of 61.9 per 1,000. South Humber has already identified prevention of teenage pregnancy as a local priority.

Shona McIsaac: I thank my right hon. Friend for that reply, and warmly welcome the Government's recent initiatives on tackling teenage pregnancy. However, does she acknowledge that emergency contraception plays a vital role in tackling unwanted pregnancy and in reducing abortion rates among young women? To that end, will she seriously consider making emergency contraception more widely available—as has been called for by Cosmopolitan magazine and the British Pregnancy Advisory Service? The harsh reality is that, for young women who have

unprotected sex on a Friday or Saturday night, it is nigh on impossible to get to their doctor within 72 hours to get that prescription.

Ms Jowell: I thank my hon. Friend for her question, and her praise of the social exclusion unit's action plan to tackle teenage pregnancy. For a combination of reasons—such as low expectations, ignorance and the mixed messages on sex sent to our young people—the United Kingdom has Europe's highest teenage pregnancy rate. My hon. Friend is absolutely right that one reason why our teenage pregnancy rate is so high is the low rate of contraception use compared with that in other European countries. About 50 per cent. of young people use contraception the first time that they have sex. One of the intentions of the social exclusion unit action plan will be to ensure better access to contraception and to counselling about contraception, including emergency contraception.

Mr. Desmond Swayne: Does the Minister consider that the best treatment for the condition to which the hon. Member for Cleethorpes (Shona McIsaac) has drawn attention is education and self-discipline, or does she consider that it might be treated by adding something to the water in south Humber? If she favours the former, why does her Department retain a fondness for adding something to the water to treat other conditions?

Ms Jowell: The hon. Gentleman's comments explain why the rate of teenage pregnancy under the Conservatives remained high—they believed that it had something to do with the water.

Bowel Cancer

Dr. Doug Naysmith: What investment his Department is making in services to combat bowel cancer. [88245]

The Secretary of State for Health (Mr. Frank Dobson): To help prevent bowel cancer, £750,000 has been made available this year for pilot studies relating to diet and colorectal cancer and £1.5 million per annum over three years is funding colorectal cancer screening pilots. Since 1998, an additional £20 million has been invested in additional work force, equipment and audit processes to speed access to diagnosis and treatment of colorectal cancer and to reduce waiting times.

Dr. Naysmith: May I draw my right hon. Friend's attention to the Bristol beating bowel cancer campaign, launched earlier this year? It has two main aims: first, to raise £1.5 million for research into bowel cancer, some of which will be spent at the world-class laboratories at Bristol university headed by Professor Chris Paraskeva; and secondly, and perhaps more important, to raise the awareness of bowel cancer among the general population.
Bowel cancer is one of those cancers that is susceptible to treatment if caught early. May I draw my right hon. Friend's attention also to the fact that recent research suggests that, following treatment, the outcome can depend heavily on the affluence or poverty of the groups from which patients are drawn? Will he assure me that he will supply the resources and has a strategy to deal with that problem?

Mr. Dobson: I welcome the activities of the BBBC campaign in Bristol, which is obviously doing good work


and is exactly the sort of thing that we want to encourage. It sounds to me that it makes better use of its money than the BBC. The statement I shall make a little later today will emphasise the extent to which we want cancer to be combated by early identification and early treatment, particularly those cancers where early treatment means that people can recover entirely. That is very much to be welcomed, and I will do my best to sustain such initiatives.

Mr. David Tredinnick: Does the right hon. Gentleman agree that irritable bowel syndrome in children is a serious problem? What resources are the Government devoting to that? Does he agree that one method of combating bowel complaints is a restrictive diet? Are the Government looking at ways in which such diets can be employed to reduce the incidence of conditions such as irritable bowel syndrome?

Mr. Dobson: I try to be honest, and I do not know the answer to the hon. Gentleman's question about what the Government are doing about irritable bowel syndrome in children. I shall write to him as soon as I find out. Diet has a major impact on that complaint and on all sorts of bowel conditions, including cancer.

Clinical Treatment

Mr. Tim Boswell: What steps he is taking to achieve greater geographic evenness of clinical treatment in the health service. [88246]

The Secretary of State for Health (Mr. Frank Dobson): We have introduced a number of measures to avoid the problem of the postcode providing unequal access to treatment in the NHS, which we inherited from the previous Government. One major development is the establishment of the National Institute for Clinical Excellence, which seemed to be endorsed for the first time by those on the Tory Front Bench today. It is there to provide guidance to doctors in every part of the country on the latest drugs and treatments.

Mr. Boswell: I am sure that the Secretary of State would allow a measure of autonomy to local health authorities and primary care groups in setting their local strategies and that it would be most inappropriate if he, as a politician, were to tell doctors what to do or what to prescribe. Would he nevertheless concede that, especially in relation to complex or expensive treatments, such as the prescription of beta interferon for multiple sclerosis, we really cannot accept for a moment longer than is necessary the continuing tyranny of prescription by postcode, and that people expect not merely more words about that but some effective action, whether from NICE or from himself, to ensure that it is ended as soon as possible?

Mr. Dobson: We will shortly hold consultations about the use of beta interferon, which will ultimately be considered by NICE, but, in fairness even to the previous Government, there are disputes in some parts of the country between clinicians about the appropriateness of the use of beta interferon and I do not want to poke my nose in if I can possibly avoid it.

Mr. Andrew Reed: I am sure that my right hon. Friend is aware that one of the most effective

ways of ensuring the even geographic spread of services is to ensure that resources are spread equally around the country. Is he aware that Leicestershire health authority is still below its weighted capitation fee, and will he ensure that, over the coming years, as the new money feeds into the national health service, Leicestershire makes up the gap between the 97 per cent. that it currently receives and the 100 per cent. that we believe it deserves?

Mr. Dobson: It is our intention to move all authorities near to their established norm, and that will certainly apply in Leicestershire as well as everywhere else.

Rev. Martin Smyth: The Secretary of State is to be congratulated on the moves to spread excellence around, but does he agree that treatment cannot be given if there is still ambiguity about diagnosis? Is it not time to concentrate more on the treatment of ME or chronic fatigue syndrome, which medical people in some parts of the country deny is a disease?

Mr. Dobson: This is one of those difficult matters on which there are almost savage disagreements between medical professionals not only about the possible treatment of the condition but about whether it even exists. Once again, that is best resolved by the people who at least in theory know what they are talking about, although if there are two diametrically opposed sides, one of them must be wrong. It is better for them to try to thrash these things out than for me to try to lay down the law. Secretaries of State should keep their powder dry and interfere over the availability of particular drugs only in extreme circumstances.

Testicular Cancer

Jane Griffiths: What measures he is taking to encourage men to examine themselves to assist early diagnosis of testicular cancer; and if he will make a statement. [88248]

The Parliamentary Under-Secretary of State for Health (Mr. John Hutton): The Government are committed to improving cancer services and we fund a number of publications emphasising the importance of a healthy life style, and giving advice on recognition of symptoms of illness, including testicular cancer. The NHS home health care guide, published in 1998, encourages men to be aware of any unusual changes and to discuss them with their doctors at an early stage. From 2000, all those with suspected cancer will be able to see a specialist within two weeks of their GP requesting an urgent appointment. Referral guidelines to help GPs to identify early symptoms of cancer are being developed to assist in the early diagnosis of all cancers.

Jane Griffiths: Does my hon. Friend agree that the lives of many women have been saved by their having been encouraged over the years to do breast self-examination and that, because the lives of men with testicular cancer—the incidence of which is doubling every 20 years—can also be saved if the diagnosis is early, men should be encouraged to examine themselves without embarrassment?

Mr. Hutton: I strongly agree. My hon. Friend will probably be aware that many of our leaflets have been


focused on younger men and that testicular cancer is the commonest cancer in men aged between 20 and 34, with about 1,000 new cases being registered each year. I am sure that she will agree that the consensus is that promoting testicular awareness is the most effective way of tackling the problem.

NHS Dentistry

Charlotte Atkins: What initiatives his Department is pursuing to increase the availability of NHS dentistry. [88250]

The Minister of State, Department of Health (Mr. John Denham): We have already taken action to improve the availability of NHS dentistry through the investing in dentistry and the personal dental services initiatives. We are currently considering options about how best to use available resources in the future to improve the availability of NHS dentistry further. As I said earlier, we shall publish a dental strategy later this year.

Charlotte Atkins: Is my hon. Friend aware that, when the Labour Government came to power, no NHS dentist in my constituency was accepting new NHS patients? Since then, new NHS dental practices have opened in Leek and Werrington, but more must be done if we are to safeguard the dental health of our population. I welcome the initiative on an NHS dental strategy, but will my hon. Friend assure me that new and innovative ways will be studied to spread access to NHS dentistry not only to inner-city areas but to rural constituencies such as mine?

Mr. Denham: My hon. Friend is right. In north Staffordshire, eight investing in dentistry bids have been approved since the Government came to power, of which my hon. Friend mentioned two. They should give a further 23,000 patients in the area the opportunity to access NHS dental care.
My hon. Friend is also right to say that, in developing the dental strategy, we shall need to study a range of mechanisms to ensure that people can access NHS dentistry. I agree with my hon. Friend that the problem is not always greatest in inner-city areas, where the task will be to persuade more of the population to register with the dentists who are available. We will need to come up with proposals that fit a wide variety of circumstances across the country.

Mr. Ian Bruce: I am sure that the Minister will know that there has been a large drop in the number of people registered with NHS dentists since the Government came to power. A dental strategy must be based on people having regular check-ups, which people are not having because they are not registered with NHS dentists. What is the Minister going to do about that?

Mr. Denham: There was a drop in the number of registrations because the registration period was shortened. The people who did not re-register were those who did not visit their dentists regularly in that period. As I said earlier, the number of NHS dentists is greater than two years ago, as is the number of treatments carried out under NHS dentistry. However, we are not complacent: as I have acknowledged several times this afternoon,

access to NHS dentistry is unacceptably difficult in some parts of the country. We have taken many more measures to tackle that problem than the previous Government, but I am sure that we shall need to do more.

GP Funding

Mr. Chris Mullin: What plans he has to review the funding arrangements for GPs; and if he will make a statement. [88251]

The Minister of State, Department of Health (Mr. John Denham): We have established the equity in primary care working group, whose membership includes representatives from the general practices committee of the British Medical Association, health authorities, the medical practices committee and the NHS executive. Its task is to consider the equitable distribution of work force and resources in general practice. I expect to receive its recommendations shortly.

Mr. Mullin: In so far as I understand the funding arrangements for GPs, they are ring-fenced and cannot be used to employ GPs on a salaried basis, for example. One effect of that is that places such as Sunderland—which has difficulty attracting its full quota of GPs—effectively subsidise places such as Buckinghamshire. Does my hon. Friend consider that to be satisfactory? If not, will something be done about it?

Mr. Denham: I personally have nothing at all against Buckinghamshire, but my hon. Friend raises an important point. It is not possible simply to take money notionally allocated to pay a GP under the general medical services budget and reallocate it to a different use. However, health authorities can use the personal medical pilot scheme to create positions for salaried doctors, as well as to vary, by agreement, the contractual arrangements with GPs. I know that Sunderland is keen to use that mechanism to deal with the shortage of GPs.
It is also worth stating that recruitment difficulties are not the only problem, including in Sunderland. Some GPs with large lists are reluctant to advertise for partners, for example. We need to address a range of matters with health authorities if we are to tackle the problems that my hon. Friend raises.

Mr. Stephen Dorrell: Might not the Minister also have referred to low rates of recruitment into general practice from among medical students? Is he satisfied with the number who go on to train as GPs, and if he is not, what will he do about it?

Mr. Denham: I am pleased that the latest national GP recruitment figures are encouraging. A 7.7 per cent. increase in GP registrars shows that many medical students see general practice as an important and fulfilling career. We shall train more medical students, and we announced nearly 800 additional places last week. I am confident that many students will go into general practice as they see our reforms putting GPs and nurses in the driving seat in the new NHS.

Private Health Care

Miss Melanie Johnson: What plans he has to introduce new regulations covering private health care. [88252]

The Secretary of State for Health (Mr. Frank Dobson): On 15 June we published a consultation document, "Regulating Private and Voluntary Healthcare", in which we have proposed a new body with tough powers to regulate private hospitals and to replace the archaic system that currently treats private hospitals as nursing homes.

Miss Johnson: I welcome my right hon. Friend's reply and the consultation, which builds on work done by people such as my constituent Caroline Buckley, who lost her mother tragically under private health care, and the many bereaved and troubled relatives concerned by the state of the private health care industry. Who does my right hon. Friend believe should foot the bill for the regulation of private health care? Should it be the NHS, as the Opposition believe, or should the industry foot the bill itself?

Mr. Dobson: We propose that the private health care industry should pay the costs of its regulation, and I can safely say that we have the Treasury's wholehearted support.

Dr. Julian Lewis: Will the Secretary of State consider my eight-year-old constituent, Laura Giddings, who lost her leg in the Planet Hollywood explosion and who, as I have said before, has been forced to turn to the private sector to obtain a suitable artificial limb? In drawing up new regulations for the private sector, will he consider applying to artificial limbs the criteria applied to wheelchairs so that someone who has to go to the private sector for a suitable appliance will receive the money that would have been spent on a less suitable appliance by the NHS?

Mr. Dobson: I express sympathy for the little girl and her family. The family have met my right hon. Friend the Minister for Public Health, and I am prepared to consider any arrangement that would facilitate the little girl's being able to get about as well as humanity can manage now that inhumanity has deprived her of her leg.

Mr. David Hinchliffe: Has my right hon. Friend been able to study the work of Dr. John Yates at Birmingham university, which proves that areas of the country with the highest number of private beds also seem to have the longest NHS waiting lists? Has he had a chance to consider that matter, and if so, what action are the Government taking?

Mr. Dobson: Yes, I have and the Select Committee on Health, which is chaired by my hon. Friend, is studying

that and other matters related to the regulation of the private sector. I look forward to receiving its report and considering it along with the other representations that we receive in response to our consultation document.

Alzheimer's Disease

Mr. Shaun Woodward: What assessment he has made of the impact of the closure of Burford hospital on the treatment of Alzheimer's disease in west Oxfordshire. [88253]

The Parliamentary Under-Secretary of State for Health (Mr. John Hutton): My right hon. Friend the Secretary of State instructed officials at the south-east regional office of the NHS executive to facilitate further discussions about the proposals to reconfigure community services in Oxfordshire. While no decisions have yet been taken, should the Secretary of State decide to support the health authority's decision on the reconfiguration, the authority is committed to consider the relocation of the specialist Alzheimer's disease service that is provided at Burford community hospital.

Mr. Woodward: The Minister will be aware that this is national Alzheimer's awareness week. He will also be aware that the Secretary of State has now had nearly an entire year to consider the future of Burford community hospital. The Royal College of Nursing report on Alzheimer's found that the Burford unit was top of 75 units throughout the country in the pioneering work that it did. The report went on to say that if we are to take Alzheimer's work seriously,
it is vital that the parent service continues at its present location.
Will the Minister take that report seriously and will he finally make a decision about Burford and allow my 750 constituents who rely on the facilities of that hospital to know that they have a secure future?

Mr. Hutton: I reassure the hon. Gentleman that we certainly take Alzheimer's disease seriously. In fact, as he will be aware, the publication of the national carers' strategy, which will help significantly the carers of people with the disease, has been widely welcomed. He will also probably be aware that, next year, the new national service framework for the NHS will be for older people. We are looking within the context of that framework to define new service models and national standards for the treatment of Alzheimer's disease. I am sure that he will welcome that.
I am afraid that I am unable to give the hon. Gentleman any of the assurances that he is seeking about the future of the hospital in his constituency. My right hon. Friend the Secretary of State is still considering those proposals in great detail, as I am sure the hon. Gentleman would want him to do. A decision will be made as soon as possible.

Public Health

The Secretary of State for Health (Mr. Frank Dobson): The new White Paper which I am presenting to the House today is called "Saving Lives: Our Healthier Nation", and that is exactly what it is about. It spells out how we want to save lives by stopping people becoming ill in the first place.
We aim to save 300,000 lives by 2010 by reducing the death rate from cancer in people under 75 by at least one fifth; by reducing the death rate from coronary heart disease and stroke in people under 75 by at least two fifths; by reducing the death rate from accidents by one fifth; and by reducing the death rate from suicide by one fifth. Those are ambitious targets, which should mean that we become a healthier nation. They are bigger reductions than we suggested in the Green Paper—and unlike the Green Paper, those tough targets now apply not only to people under 65, but to people under 75.
Those targets are backed by action. On cancer, it is action against smoking, action to improve diet, action to improve screening uptake and quality, action to modernise cancer scanners and equipment, and action to improve treatment. On heart disease and strokes, again there will be action on smoking and diet and also action on blood pressure and exercise, action to cut heart attacks and action to improve rehabilitation.
However, that is only part of the story. We are not only setting tougher targets than the previous Government: we are explicitly aiming to do something quite different. Poor people are ill more often and die sooner, so we are going to tackle the inequalities in health, which grew under the previous Government.
Our policies are designed to improve most of all the health of the least healthy. The national health service has a big part to play, but our strategy requires a three-way partnership between the whole Government, local communities, families and individuals. None can succeed without the others. We reject the idea that individuals are powerless victims of their fate, but we also reject the Tory idea that individuals are entirely to blame for their own poor health.
We need to use all the means at our disposal to make it possible for everyone to lead a healthier life. Unemployment, low wages, poor housing, crime and disorder, lack of education, and environmental pollution all make people ill. The Government are taking action to tackle them. The windfall levy, opposed by both the Tories and the Liberal Democrats, provides jobs and training for young people; and 400,000 more people are now in work than when we were elected. Low pay is a health hazard, so we shall improve the health of more than 2 million people and their families through our introduction of a national minimum wage. This autumn, those families and many others will be further helped by the working families tax credit. Many thousands more will benefit from having a decent home to live in as a result of our increased investment in new and better homes for people who are badly housed at present. Improved educational standards are providing economic opportunity and pathways out of social exclusion.
The Government will play their part, but so too must communities. In some areas, whole neighbourhoods are unhealthy because of poverty, pollution, crime and

disorder. We must target effort on those neighbourhoods. The most deprived areas are being helped by the extra effort and extra funding that flows from regeneration schemes, from health and education action zones, from lottery funds going into healthy living centres, from the replacement of substandard general practitioner premises, from the sure start programme for children, from the healthy schools project, and from our £96 million public health development fund.
We want to work with community organisations, local councils and health bodies to ensure that those programmes are delivered on the ground. Every health authority will have to draw up and implement a health improvement programme that identifies and meets the particular health and health care needs of its area. That is because priorities differ in different parts of the country, with different individuals and groups having different problems—for example, respiratory disease in areas of heavy industry, or formerly of heavy industry, or the higher incidence of heart disease or cancer among certain ethnic groups. Local councils, businesses and voluntary organisations will all be involved in developing and implementing those plans.
Fluoridation illustrates the new approach. The White Paper makes it clear that we will conduct an independent expert review of the safety and benefits of fluoridation. If that shows that fluoridation is beneficial, local authorities will be given new powers to require water companies to fluoridate where there is local support for doing so.
We also propose to strengthen the public health professions and to develop extended roles for health visitors, community and school nurses, and midwives. The new primary care groups will enable GPs and practice nurses to draw upon their unique relationship with patients to help to promote better health. Many of the groups are already doing that.
We want action by Government and action by communities, but that cannot be the end of the story. Individuals and families must play their part—for example, on smoking, which is the biggest single cause of avoidable death and of inequalities in health in this country. We have a twin-track strategy to stop the tobacco companies recruiting new smokers and to help existing smokers to give up the habit. Unlike the Tories, we accept the overwhelming evidence that tobacco advertising helps to get children addicted, so the Government intend to play their part by banning advertising from December. However, we also accept that individuals need help to give up smoking, which is why we are making free nicotine replacement therapy available to poor smokers who want to give up.
That is a recognition of the fact that up to now most health promotion strategies have actually widened the health gap, because the better-off have taken more notice than the worst-off. We need to develop strategies that have the most impact on the least healthy. That is one reason why the White Paper announces our decision to replace the Health Education Authority with a new hard-hitting Health Development Agency, with a much bigger role in working out and delivering the approaches that will work best.
Individuals and families can help one another. That is why we are launching a health skills programme that will give young people first-aid skills and health information; that is why we are launching our expert patients


programme to help people with chronic diseases such as asthma and diabetes better to manage their conditions. That will be good for the NHS and good for patients, as fewer complications mean better health and less demand on GPs and hospitals, with resources used to tackle the highest priorities.
The White Paper sets out long-term plans for improving the health of the nation and reducing inequalities in health. They really are long-term plans: their full benefits will show up only in a decade or more. That is the time scale involved, but it is no reason for delay. It is all the more reason for getting on with it: 300,000 lives saved, 300,000 reasons for action.
Fifty-one years ago this week, the national health service, which Nye Bevan founded, came into operation. We all benefit from the far-sightedness of that Labour Government, whose action cut inequalities in access to health care. By itself, that action could not reduce inequalities in health, but common justice requires that we do so.
Conservative Members who represent areas where people are comfortably off and pretty healthy should recognise that ours is a simple but difficult aim. We want to help to make sure that the standard of health of the people they represent in Surrey or Sutton Coldfield is shared by the people we represent in Barnsley or Bethnal Green. That is what we mean when we say that we want to end the divisions that mar our society and instead create a genuine one nation. I believe that that is what all decent people want, wherever they live and whatever their own state of health. That is why I commend the White Paper to the House.

Hon. Members: Hear, hear.

Dr. Liam Fox: Usually, farewell performances get a better cheer than that. The Opposition would welcome any genuine measures to improve the health of the people of the United Kingdom, but we deserved better than the right hon. Gentleman's remarks.
There are some aspects of the White Paper that we welcome. Since the publication of the Green Paper, the Secretary of State has changed the targets, but I am sorry that he has not widened them. For example, the expert patients programme he outlined for asthma and diabetes is welcome, but it is not a substitute for targets, which we wanted. Of course we need to send positive health messages to the population—lose weight, eat sensibly, exercise more and, as it says in "Ten Tips For Better Health":
Manage stress by … talking things through … Practise safer sex
and
follow the Highway Code.
Those are important messages for the public, but the White Paper is heavy on gimmicks and short on substance.
Let me give one example. The section on defibrillators says:
members of the public can use them as soon as it is clear that they are needed
in, for example, supermarkets, railway stations and airports. How are members of the public to know when a defibrillator is needed? How will they be trained? What

will any indemnity consist of—will the Government provide blanket indemnity? If the Government are truly concerned, it would be better to spend the money on improving ambulance response times.
If, as the Secretary of State said, cancer scanners are to be modernised, are more staff to be recruited to operate them and interpret the results? There is currently a shortage of both radiographers and radiologists. At a time when fully trained obstetricians and gynaecologists are being laid off, how does that give comfort to women suffering from cervical or uterine cancer? The reality does not match the rhetoric. If exercise is to be encouraged, why has sport been removed from the national curriculum for primary schools? Does the right hon. Gentleman genuinely believe that suicide rates are the best way to measure the prevalence of mental illness, and on what basis has he arrived at that judgment?
If the White Paper is big on rhetoric, it is short on facing up to the big issues. The new approach was well illustrated by the Secretary of State's remarks about fluoridation: if it is shown that fluoridation is beneficial and there is local support for it, local authorities will be given powers in that respect—but only after there has been an independent expert review. Information on fluoridation is pouring out of the Department of Health, but the Government refuse to make a decision because somebody, somewhere, might not like it. That is a cowardly and pathetic approach to public health.
Rather offensively, the Secretary of State suggested that the Conservatives had said that individuals were responsible for their own ill-health. No Conservative Member has ever suggested such a thing. However, the Government cannot solve all the nation's health problems; the right hon. Gentleman was correct to say that there must be a partnership. He said that there must be a three-way partnership between the whole of Government, local communities, families and individuals—four parties, not three. There was no mention of the medical profession, which seemed to be noticeably lacking from what he had to say—perhaps because he has alienated almost all its members in recent times.
Perhaps the worst part of the statement came at the end, with the Secretary of State's class warfare rhetoric. As a result of Conservative economic policies and his party's very large majority, many of his Back Benchers represent the constituencies that he says are very affluent and therefore need less money. His ugly soundbites will offend many inside and outside both the House and the medical profession, as well as the natural decency of many people who care about those less fortunate than themselves. Is he saying that there is massive inequality in the allocation of money in the health service on a geographical basis? Will there be a transfer of resources from the Prime Minister's beloved middle England, or is the rhetoric merely aimed at those voting for a London mayor?
Despite laudable aims, better health can be achieved only with a health care system that is working well. Faced with a system in which morale is at an all-time low, junior doctors are being betrayed, complaints against the NHS are up and patients are waiting to go on waiting lists, we have heard nothing but complacency. Health is getting worse under Labour. Although the Secretary of State is


excelling at soundbites and photo opportunities, he has failed in his primary duty to put patients before his party politics.

Mr. Dobson: The hon. Gentleman speaks a little quicker than his predecessor, but he does not talk much more sense. The first target of his mockery was the Government's chief medical officer. I would rather stick by that distinguished doctor more than the one who has just been speaking.
In talking about people dying, the hon. Gentleman apparently upbraided me for choosing the measure of suicides. As a doctor, he ought to know that, if suicides are successful, they involve people dying. If we can reduce the number of suicides, we will reduce the number of deaths. That seems to be a reasonable proposition.
The hon. Gentleman complained that we are not getting on with fluoridation. My understanding is that the data at present available in the Department of Health are rather out of date. We want an up-to-date assessment. I have never for one minute made any secret of my view that fluoridation works and should be introduced, but in fairness to those who have what they see as legitimate doubts, it is only right and proper that we have an independent review in which people may put their point of view and we may come to sensible conclusions.
On the rest of it, it was very interesting that the hon. Gentleman never seemed to recognise that ill health is caused by unemployment, poverty, low pay, crime and disorder—that soared under the Conservative party—or poor housing. We are addressing all those matters. We are improving the NHS so that it can make a bigger and better contribution. The point that I was trying to make was that all the Government and all the country must be involved.
If the hon. Gentleman thinks that it is class war for me to suggest that I would like the people whom I represent to be as healthy as those in the constituencies of my Tory predecessors, he believes in a strange version of class war. Most decent people in his constituency, or in the Surrey constituency of one of my predecessors, would probably agree that it is a good idea for us all to be as healthy as one another, and to achieve that by raising, not lowering, standards.

Mr. David Hinchliffe: I warmly welcome my right hon. Friend's statement. Does he agree that for the previous Administration, public health was politically inconvenient—for the reasons that he has set out—and that as a consequence they sidelined, for example, the crucial Black report, on which we should have acted in the early 1980s and which would have delivered so much in public health to the generations who are being born today? Did they not also sideline the public health function?
I want to pick up one point on which my right hon. Friend knows I feel strongly. One thing lacking from what he said today is the restoration of the public health function to the political mainstream in local government, where it used to be, alongside housing, social services, education and environmental health. Will he consider that point, which is crucial to achieving the objectives that he has rightly set out today?

Mr. Dobson: I agree with my hon. Friend's point about the previous Government refusing to address health

inequalities. Not only that—they banned the use of those words in the Department of Health, so that officials were forced to refer to variations in health because the Conservatives practised inequality but were not willing to preach it.
We appointed Sir Donald Acheson, who had been one of the previous Government's chief medical officers, to produce a report. His excellent report on various sources of inequality in health put forward many sensible propositions on how we should go about reducing those inequalities, and I am glad to say that we are getting on with that.
As my hon. Friend knows, I sympathise with his view about the disappearance of the post of medical officer of health from local government—but when we consulted, in opposition, on whether that post should be restored, local government had little enthusiasm for the idea. That is one of the reasons why we placed in the Health Act 1999 a duty on health authorities to draw up a health improvement programme to identify the health care needs of their areas. That must be done through co-operation and consultation with local government and voluntary organisations. I hope that the report and that approach will eventually have the status that the chief medical officer's report had in times gone by.

Mr. Simon Hughes: We very much welcome the White Paper as far as it goes, but why is it much more timid than it was originally billed to be? Are the Government yet committed to putting more resources from our national wealth into national health? Are they committed to putting more resources into public health, or will those resources come from the money allocated to the NHS? What indication is there that there will be, for example, a great programme to make sure that people do not live in badly insulated, damp flats and that local government has the money to deal with that?
Why were there 21 targets under the previous Government, but only four targets now? Why is there no target to reduce smoking? Why is there no target to reduce traffic? Above all, why is there no target to reduce health inequality, which is meant to be at the centre of the whole policy?
Will all Government policies be audited? If so, will we be given a guarantee that there will not, for example, be policies to take away benefits from single mothers, to reduce help to asylum seekers or to prevent pensions from increasing in line with national wealth, none of which can be great for health equalisation?
Did I understand the Secretary of State to say that the Health Education Authority—the one body that might be able to stand up and speak independently about what the Government are or are not doing—is to go? We want a body that can tell the Government when they are not meeting their targets and hold the Government to account. If the Government are tough on themselves, they might deliver; but if they are weak on themselves, they will let the rest of us down.

Mr. Dobson: It sticks in the gullet to listen to a Liberal Democrat say that the Government are not putting money into measures that combat ill-health, when his party voted against imposing the windfall levy on the fat-cat utilities. That money has been invested in providing jobs and


training for young people—and as the hon. Gentleman should know, the only group whose mortality and morbidity figures were increasing was young, unemployed men. We are reducing those figures, and we are doing so with money that the hon. Gentleman did not want to collect, so he cannot complain about the way in which we are spending it.
We are putting £96 million into the public health development fund.

Mr. Hughes: Is it new money?

Mr. Dobson: It is new money. It is money that was not previously intended for that purpose, so it must be new. We are putting £5 billion into building new houses and improving old houses. Much of that money is intended to make sure that houses are well insulated, and it will concentrated on families who are poor and old people who are poor. That is more money that we are spending.

Mr. Hughes: Is it new money?

Mr. Dobson: The hon. Gentleman talks about new money as though there were something different about it. It is money. It gets houses built and improved; it gets jobs for young people; and it gets all sorts of other improvements.
When talking about health, we must remember that the Tories wanted to spend only £500 million a year extra. We want to reduce inequalities, but it is sensible to measure them in particular localities. It is necessary to be a statistical freak to obtain any significant run of figures about reducing health inequalities in less than about a decade.
The hon. Gentleman should know, having burbled on about pensions, that they have increased faster than wage inflation.

Mr. Kevin Barron: My right hon. Friend's statement will be welcomed by right hon. and hon. Members and by many of those who have worked in the medical profession for many years. Does he agree that the rant about the national health service from the Opposition Front Bench shows little understanding of public health? If economic and social environments lead to ill-health in certain regions and if getting rid of it is a war, it is a war that should have been fought many years ago.

Mr. Dobson: When it comes to fighting a war against poverty or one against ill health among the poor, the Tory party would only qualify for white feathers.

Mr. Stephen Dorrell: Is it not extraordinary that the Health Secretary can come to the House to make a statement about his future policy towards public health and spare virtually not a word for the future of the medical profession? Rather than inventing entirely spurious party political differences between the Labour party and the Tory party, should he not have devoted himself more seriously to his statutory responsibilities for the national health service on the day after Dr. Bogle accused the Government of achieving total alienation from the medical profession? Does the right hon. Gentleman remember the speeches that he used to make

in opposition about how morale in the health service had reached an all-time low? That is what he and his hon. Friends used to say. Has he not used his two years in the Department of Health to prove himself wrong?

Mr. Dobson: No.

Mr. Dennis Skinner: Is my right hon. Friend aware that we have just about got rid of the two years of Tory spending plans, albeit that he secured a little extra money for health? We are now moving into an era where my right hon. Friend will be able to spend £21 billion over the next three years, which is about 10 times as much as the Liberals wanted and more than twice what the Tories wanted. Does he accept my opinion that he must ensure that not a penny of that money is wasted? Come the general election, when some people will be prattling on about the euro and all that crap, we should be talking about saving people's lives.

Mr. Dobson: I say to my good and hon. Friend that I hope that by the time of the next general election there will be some signs of improvement in people's health. However, we can only measure those signs locally, not nationally.

Mrs. Virginia Bottomley: The right hon. Gentleman will know that I applaud the strategy, unpopular as it often is, and difficult as it is to win battles with colleagues in delivering it. However, I ask him to look again at some of his comments. Why did his party vote against the new GP contract? It provided bonus pay for GPs in deprived areas; it paid them for the first time to screen new patients; and it gave them additional resources for hitting targets on immunisation and cancer screening. There are few practical steps that could do more to raise standards in poor areas.
Secondly, I applaud the reappearance of mental health as a target, but regret that a more sophisticated target has not been found than suicide figures. Will the right hon. Gentleman examine the effect of NHS Direct, which is starving of resources Samaritans and Saneline, which offer a practical service for people with mental health problems?
Finally, is it the right hon. Gentleman's policy to make the sick healthy by making the healthy sick? Mr. Roger Humphreys was admitted to the Royal Surrey hospital at 2.30 on Sunday. He was not found a bed on the ward until Monday night. He is 90, and he happens to live in a healthy area. People in that area feel that the Government's policy is to starve them of resources.

Mr. Dobson: We are not starving any area of resources.

Mr. Nicholas Soames: Yes, you are.

Mr. Dobson: The craw can wait. Every part of the country is getting more money in real terms this year than last year, and that is an increase by anyone's standards.
I congratulate the right hon. Member for South-West Surrey (Mrs. Bottomley) on some of the things that she did when she was Secretary of State, but not all that many. We are devoting more resources to mental health now


than have ever been devoted in the past, and we are paying great attention to that aspect. It is fairly significant that of the Nye Bevan awards that were awarded yesterday, three were for mental health projects. The overall winner—the Nye of Nyes—was also for a mental health project, because we believe that in the past mental health has not had the attention that it deserves.
It is rather foolish of the right hon. Lady to start attacking NHS Direct, which is a good service. It has worked well. When I announced its extension, it was welcomed from the Tory Front Bench, which is a fairly novel experience for me, at least. NHS Direct provides a first-class service and offers help to people with physical and mental health problems. It is not draining resources from anyone. It is providing a 24-hour nurse-led service in 40 per cent. of the country now; it will cover 60 per cent. of the country by December; and it will probably cover the whole country by this time next year. When an independent survey of satisfaction was carried out, 97 per cent. of the people contacted were satisfied.

Mr. John Gunnell: How will my right hon. Friend judge public opinion on fluoridation in a particular area? My family, who were brought up in New York, still benefit from the fluoridated water that they used there. I hope that we will introduce fluoridation and give the right instructions.

Mr. Dobson: Our proposal, subject to the outcome of the independent review, is that the law should be changed so that local councils conduct the process of consultation, because they have a democratic legitimacy that the local health service does not have in that respect. We would then have to sort out the form that the consultation would take in order to meet the requirements, whatever they were. Once that consultation had been carried out, and if there was a local majority, the water company serving that area would be obliged to fluoridate.

Dr. Peter Brand: I very much welcome the consultation on social inequality in the report, but I am extremely worried about the loss of the national targets. They seem to have been shoved off into some never-never land of local targets. When the Green Paper was issued, the Minister gave an undertaking that he would place the local targets, in amalgamated form, in the Library, so that we could see whether they were being met through local endeavours.
Primary care groups have been working to health improvement programmes—and no doubt setting targets—for the past two months, yet we have not seen any Government figures to indicate what targets are being set, let alone what they are trying to achieve. When will we have a statement on these matters?

Mr. Dobson: The hon. Gentleman speaks as though the "The Health of the Nation" project succeeded, but it did not. It failed. It did not make the progress that it should have done. It is our view, and that of a substantial number of people who could be described as practitioners of public health—although I accept that it is not a universal view—that it is better to have a series of local targets and

to monitor progress. The health improvement programmes will include targets, they will be monitored by the NHS regions, and therefore they will be monitored nationally—

Dr. Brand: Will the targets be published?

Mr. Dobson: Yes, the targets will certainly be published. Everything is published. The health improvement programmes themselves are published and the progress reports will have to be published. That brings pressure to bear on those on whom it should be brought to bear—the local people who are supposed to be doing the job.

Ms Diane Abbott: My right hon. Friend said earlier that mental health is a much-neglected area of public health. Does he agree that the mental health of black and ethnic minority people is an even more neglected area, even though a disproportionate number of black people are diagnosed as schizophrenic or are in the mental health system?
For three years, successive Health Ministers have told me that the Department is collecting figures nationally. For three years, successive Health Ministers have told me that they still do not have figures that they can make publicly available. Will my right hon. Friend take steps to ensure that his Department does what it says it has been doing for the past three years—collect figures on the number of black and ethnic minority people in the mental health system so that strategies can be developed to give the whole community the service it deserves?

Mr. Dobson: As my hon. Friend knows, I am determined to make sure that every individual and group in the country receives the proper, targeted attention they deserve, but, as she knows, one of the problems is that there are disputes about whether some black people are being diagnosed in what might be described as a racist way as suffering from mental illness, or a particular form of it, when that is not the case. We are wrestling to get statistics on which we can genuinely rely, rather than publishing statistics that we believe to be unsatisfactory and possibly misleading.

Mr. Peter Brooke: Where does the thinking behind the White Paper take the Department's contribution to the debate within the Government on the future of housing benefit?

Mr. Dobson: We are involved in all debates and all discussions within Government on housing policy generally, which is the responsibility of my right hon. Friend the Deputy Prime Minister. They include all aspects of housing policy, including benefits. We are involved, and we have to try to make sure that people have homes that are safe, secure and healthy at rents that they can afford.

Mr. James Wray: Does my right hon. Friend believe that including fluoridation in the White Paper will set alarm bells ringing all over the United Kingdom? Is he aware of the moral, medical and legal aspects of fluoridation? Does he know that fluoridation breaches the Medicines Act 1968, the Water Act 1945 and the Food and Drugs (Scotland) Act 1956? No one in the medical or dental professions decided that fluoridation was good for people's health; that decision


was made by a researcher appointed by an aluminium smelting company, who decided that, because dumping its waste was costly and because that waste was attracted to teeth and bones, water should be fluoridated. That is why people get skeletal fluorosis, dental fluorosis and chronic fluorine poisoning.
For the past 20 years, the medical and dental professions have been divided equally on fluoridation of public water supplies. I hope that, following the independent review and in order to stop one holy war in which I shall certainly play a great part, we do not fluoridate water and do not breach the civil liberties of individual citizens of the United Kingdom.

Mr. Dobson: It is certainly the case that there are divisions within the medical and other related professions over the merits or otherwise of fluoridation, but it would probably be an exaggeration to say that they are evenly divided. In so far as I have looked at the most modern evidence—one of the problems is that quite a lot of the evidence is not modern—I am reasonably convinced that the benefits exceed any risks. We should consider the health of children of poor families in Birmingham and in big cities where there is not fluoridation. There is a danger that some people may be putting their principles above a great deal of pain and unpleasantness for a large number of children.

Mr. David Curry: Where will the dividing line be between the Health Development Agency and the Food Standards Agency in matters of nutrition? What are the implications of the statement for the Government's review of local authority standard spending assessments?

Mr. Dobson: We have made it clear that the Food Standards Agency will have some responsibility for nutrition. That is also being made clear by my colleagues on the Committee considering the Bill. The primary responsibility for nutrition will remain with the Department of Health, where it properly lies, as part of our overall programme to improve public health. We did not think that it was right to separate nutrition, as some people have suggested. Quite a few people thought that the Food Standards Agency should take on a substantial part of the Department of Health's role and virtually the whole function of the Ministry of Agriculture, Fisheries and Food, and that that role should be recreated at arm's length. We did not think that that was a sensible approach.

Mr. David Lock: I welcome the White Paper. When is the review likely to be published? I invite my right hon. Friend to take this opportunity to congratulate the water companies—through Water UK—on their responsible attitude towards the discretion that was given to them under the Water (Fluoridation) Act 1985. It proved to be hopeless in practice. The water companies, the British Medical Association and the British Dental Association did not want that provision, and the Government have said that they will remove it.

Mr. Dobson: We intend to publish a report next April. I hope that it will be then, but these matters tend to drag on, as my hon. Friend knows. The water industry wants the law to be clarified. As for most organisations, a little clarity is a great help.

Mr. John Bercow: Given the importance of exercise to the health of the nation, what discussions

prior to the publication of the White Paper did the Secretary of State have with the Department for Culture, Media and Sport, with specific regard to the reduction in the time that is devoted in primary schools to physical education in general, and to the abolition of the compulsory requirement for team games to be played competitively after the age of 14? Furthermore, if the right hon. Gentleman believes in leading by example to show the importance of exercise and fitness—he appears to be shaking his head at that suggestion—will he take up my challenge to take me on at a game of better than five sets in lawn tennis on the assumption that I shall readily give him a 30:love start in every game?

Mr. Dobson: Apparently, the hon. Gentleman is so talented that, but for the fact that he was unable to find the time, he would have won the Wimbledon championship. One advantage of my girth is that no one ever accuses me of being part of the nanny state.
The Department for Culture, Media and Sport was involved in our discussions. In fact, when the hon. Gentleman complains that sport has been eliminated from schools, he is criticising the Government who eliminated it.

Mr. John Austin: Like my hon. Friend the Member for Wakefield (Mr. Hinchliffe), I remember the days of the old medical officer of health. I welcome the statement, which has elevated public health on the political agenda, and begins to transform a national illness service into a national health service. I congratulate my right hon. Friend and the Minister for Public Health on the attention they have paid to the problems of osteoporotic fractures and the possibility of prevention. I welcome the national guidelines.
In his statement, my right hon. Friend emphasised the importance of local decision making. What attempts will be made to ensure that those important national guidelines, which will reduce the cost to the Exchequer and to the health service, as well as the cost in human suffering, are implemented locally? On his commitment to action and his reference to smoking, given that most Departments, local authorities and private employers have policies on smoking in the workplace, when will the House be dragged not into the second half of the 20th century, but into the new millennium?

Mr. Dobson: The House of Commons Commission and the House itself are responsible for what happens here, so I am cleared of all responsibility. Like everyone else, I just have my one vote.
As I said earlier, I have some sympathy with the view that it was a sad change when the role of the medical officer of health disappeared from local government, and the task was taken on by people in the third and fourth tiers of a health authority as a part-time job, when they could get around to it. By changing the law in the Health Act 1999, we have made the production and implementation of a health improvement programme part of the core of the national health service. I hope that that will elevate the function in a way in which it has not been elevated for a long time.
I pay tribute to the National Osteoporosis Society for the developments to which my hon. Friend referred.

Sir Sydney Chapman: Is the right hon. Gentleman aware that his statement was a classic of


its genre? A similar statement led a former Leader of the Opposition to observe that parts of it were true and parts of it were trite, but that, unfortunately, what was true was trite and what was not trite was not true.
Let us take an example: the question of fluoridation of our public water supplies. All the research has been done, and all the evidence has been amassed. What is needed is a decision whether to insist that our public water supplies are fluoridated, or that they are not—or to leave it to someone else to make a decision. No further research is needed.

Mr. Dobson: I have considered the matter carefully, as has my right hon. Friend the Minister for Public Health. We are both in favour of fluoridation, but we recognise that a substantial amount of the research that has been done, and is in the literature, is now pretty old. We would like a review to consider the up-to-date position.
We live in a democracy. A substantial number of people do not share my views on putting fluoride in water, so I think that I—and all the rest of us—have an obligation at least to deal with any legitimate concerns expressed by those people. If we are left with plain prejudice against fluoridation, we can assess that at the end of the process; but I feel that we owe it to everyone to try to get a group with sufficient authority, status and independence to carry all sensible people with them.

Several hon. Members: rose—

Madam Speaker: Order. We must move on.

Points of Order

Mrs. Angela Browning: On a point of order, Madam Speaker. Today, hon. Members on both sides of the House received a three-page critique from the Communication Workers Union on the Post Office White Paper. Given that the document has yet to be presented to the House of Commons, could you use your good offices with the Secretary of State for Trade and Industry—and not just to encourage him to bring the White Paper to the House very quickly? In the past fortnight, the Secretary of State has made four major announcements, none of them on the Floor of the House. The House would welcome an opportunity to hear from him at first hand, and to question him.

Madam Speaker: As the House knows, I feel strongly that important Government decisions should be made known to the House before being communicated to anyone outside. On the basis of the papers that the hon. Lady has given me—I am grateful to her for letting me see them—I am by no means convinced that any such impropriety has occurred in this case. As for the hon. Lady's request for statements to be made from the Government Front Bench, it is for Ministers to inform me when they are ready to do so.

Mr. Tam Dalyell: On a point of order, Madam Speaker. As a now shy Scot, may I ask, in regard to a reserved matter, whether by any chance the Secretary of State for Health asked for an opportunity to answer question 36, on a United Kingdom matter—namely, the policy on retention of samples of smallpox? This is an urgent matter, in which the United Kingdom could play a major part. It would be a terrible thing, which we would rue greatly, if smallpox samples were destroyed without any being kept. Did you have any such request from the Secretary of State?

Madam Speaker: No, certainly not. Question 36 would have been dealt with had we progressed more speedily. It is very difficult for us to reach question 36, but I have to say that I am very disappointed, not just today but every day, with the lack of progress that is made at Question Time. I should like us to make better progress. I doubt that we could have reached that question, but we might have made a better stab at it if we had made better progress.

Property Letting Agents (Client Money Segregation)

Mr. Howard Flight: I beg to move,
That leave be given to bring in a Bill to require the segregation of client monies collected by letting agents, to be held in designated client money accounts.
My Bill is to require the segregation of client money—rent and deposits from tenants—that is collected by letting agents, to be held in separate designated client money accounts. I was amazed to discover from a constituency case that that is not already the law. The position is entirely analogous to that of lawyers, stockbrokers and fund managers handling client money.
The case involved a very decent constituent who was looking after the interests of some elderly neighbours who were visiting family elsewhere. The constituent helped that couple to arrange the letting of their house. She diligently searched out a letting agent who had the Association of Residential Letting Agents cover.. The letting agent went bust in 1995, since when my constituent has been unable to recover the £1,000 owing under the ARLA bonding arrangements. Digging into the case, I discovered that part of the reason for the failure to recover is because there is no simple, clear law requiring the segregation of client money.
The Estate Agents Act 1979 set up a requirement for deposits for buying houses to be segregated when estate agents deal with deposits; the regulations to that were set out in 1981. Letting agents are regulated under the Accommodation Agencies Act 1953. That created three offences, but did not lay down a requirement to hold deposits in segregated client accounts. There was a Government consultation on the Act in 1993. In 1994, there was a parliamentary question. The then Government felt that, in principle at least, the ARLA arrangements should suffice.
The reason why ARLA has not paid out in that constituency case—it can happen quite often—is that the insurance bonding requires clear fraud to have occurred. Police rarely prosecute when letting agents go bust. A letting agent spending a client's money merely on the employment of staff is not sufficient to constitute fraud. Therefore, the ARLA bonding arrangements often do not work.
In 1998, ARLA approached the Minister for Local Government and Housing with proposals for a clear law requiring the segregation of client money into client

accounts, but nothing has resulted from that. Again, it is crucial to crystallise the legal situation. The National Association of Estate Agents is particularly keen that the proposal should become law. Similarly, the Southern Private Landlords Association is keen for that to happen. Citizens advice bureaux point out the huge increase in the number of private tenants—it is up 600,000 and still rising—and to problems over recovery of deposits. They claim that there are unreasonable withholdings of some 50 per cent. of deposits. Therefore, all that is wanted is a simple law to benefit both tenants and landlords.
In October 1998, the Minister for Local Government and Housing called on landlords and agents to set up some form of pilot scheme. Candidly, it is a straightforward issue, not a pilot scheme matter. It is not even a complicated regulatory matter. Clear law, as with analogous situations, is what is wanted.
In the past two years, as the market has increased, there has been a massive increase in the number of letting agents. Analogous to that increase was the increase, in the late 1980s, in the number of estate agents. Currently, however, the lettings market is satiated, and it is often quite difficult to let property. In the next two years, it is likely that many letting agencies will fail, just as many estate agencies failed in 1990–92.
I therefore urge Ministers to deal with the matter in a timely fashion, before many innocent people—including some of my constituents—are damaged because current arrangements cannot operate efficiently without clear law on the matter. We need only simple legislation—which should be passed now—requiring segregated accounts, and arrangements analogous to those established by ARLA, stipulating that letting agents may take money from client accounts only in accordance with letting agreements, such as to cover their own bills, as specified.

Question put and agreed to.

Bill ordered to be brought in by Mr. Howard Flight, Mr. Peter Viggers, Mr. Graham Brady, Miss Julie Kirkbride, Mr. Andrew Tyrie, Mr. John Bercow, Mr. Christopher Fraser and Mrs. Marion Roe.

PROPERTY LETTING AGENTS (CLIENT MONEY SEGREGATION)

Mr. Howard Flight accordingly presented a Bill to require the segregation of client monies collected by letting agents, to be held in designated client money accounts: And the same was read the First time; and ordered to be read a Second time on Friday 23 July, and to be printed [Bill 132].

Orders of the Day — Finance Bill

Not amended in the Committee and as amended in the Standing Committee, further considered.

Clause 2

RATES OF DUTY AND REBATE ON HYDROCARBON OIL

Mr. David Heathcoat-Amory: I beg to move amendment No. 40, in page 1, line 24, leave out '£0.5288', and insert '£0.499'.

Madam Speaker: With this, it will be convenient to discuss the following amendments: No. 41, in page 1, line 26, leave out '£0.4721', and insert '£0.4355'.
No. 42, in page 2, line 2, leave out '£0.5021', and insert '£0.4557'.

Mr. Heathcoat-Amory: The amendments seek to bring the massive increase in road fuel taxes back into line with the retail price index. Since the general election, the Government have increased the rate of annual increase in road fuel tax—the so-called escalator—from 5 per cent. above the rate of inflation to 6 per cent. above the rate of inflation. Additionally, they have sneaked in an extra Budget, and a further increase. Moreover, they have loaded further increases on to some fuels, above what one might have assumed to be the 6 per cent. limit.
Diesel fuel has been singled out. This year, VAT on diesel has been increased not by 6 per cent., but, in cash terms, by almost 12 per cent. That increase, in a single year, is simply staggering. It is a tremendous and enduring burden for all those driving diesel cars and, most particularly, for the road haulage industry, which relies almost entirely on diesel fuel.
The Government have replaced the environmental justification for fuel taxation—which does exist at lower levels and for more moderate increases—by a crude tax and cash grab. It is part of the relentless increase in business and personal taxation that we have seen in the past three Budgets. Annually, fuel duties now net a staggering £25 billion, and that is rising steeply.
The Government have ceased even to attempt to justify that huge annual tax escalator on environmental grounds. In the Budget debates, we asked Ministers how they justified the increase on grounds of global warming, or otherwise, but they simply backed away from the issue entirely. I am not surprised, because the Government's own publication on climate change shows that this is a ridiculously expensive and inefficient way of achieving moderate reductions in carbon dioxide emissions. Compared with other reductions which are attainable in the domestic sector and other business sectors, this is not the right way to go about reducing carbon dioxide. The same reductions could be achieved at a fraction of the cost.
Most remarkably, the Government seem entirely unaware of the scale of the increases that they have put through. The Chief Secretary told the House on 21 April:

The truth is that the price of a litre of diesel has risen by 7p since the general election."—[Official Report, 21 April 1999; Vol. 329. c. 929.]
It was immediately pointed out that the Automobile Association had calculated that the increase in diesel prices since the election was not 7p, but more than 13p a litre—nearly twice what the Chief Secretary had admitted to.
The figure was checked by "Energy Trends", an official index of the energy sector, and the House of Commons Library helpfully confirmed that the figure of 13p a litre was correct. The Library confirmed also that it had no idea how the Chief Secretary had calculated his figure.
We took this matter up with the Chief Secretary, but he failed or refused to admit his error, until a parliamentary answer from the ever-helpful Economic Secretary referred to the correct figure and the right source. It is now confirmed by the Treasury that the price of diesel rose between the election and that April date by 13p a litre.
In a sense, it does not matter that it took so long for the Government to admit the truth, because everyone else knew the truth. Motorists, particularly rural motorists, all knew the truth. Ministers in their Government cars may be insulated from the increases. They do not have to fill up their own tanks, and they are becoming increasingly out of touch with the needs of motorists, particularly those in isolated areas. Now, about 85 per cent. of the cost of fuel is represented by taxation. A forecourt or petrol station is now a massive tax office for the Government.
It is not just the private motorist who knows the truth and must bear the daily burden—the road haulage industry knows it. The industry warned the Government before the Budget. Its representatives gave the Government the facts and figures, explained their case with great patience and showed the Government that the industry would be made uncompetitive in European terms by the annual increase. Their case was dismissed and entirely ignored by the Government.
We now have the most expensive diesel in Europe, with a cost that is far higher than our continental neighbours. There is no way that the haulage industry can avoid this tax. Lorries do not drive around for fun, and there is no way in which they can avoid using diesel or avoid the tax. The haulage industry either has to absorb this extra tax burden, or pass it on. The burden is enormous. Nearly a third of the costs of running a heavy goods vehicle is represented by fuel costs. If a company has to absorb those costs, it could be put out of business—or certainly be made uncompetitive. If it passes on the costs, that raises the price of all goods which must be transported by road.
Yet the Government say that they are in favour of industrial competitiveness. They have had seminars and meetings to lecture industry about the benefits of American-style management, competition and productivity. If that is their message, they could start by giving us American fuel tax levels.

Mr. Christopher Leslie: Is the right hon. Gentleman making a pledge that the Conservative party


manifesto for the next general election will include the aim to work towards reducing fuel duty to American levels?

Mr. Heathcoat-Amory: I am making the point that if the Government are so keen on American business practices they should start introducing some American-style costs. The European Union has to put up with the spectacle of the Prime Minister telling it to adopt American business regulation, or the lack of it, while at the same time he is converging on European costs or, as in the case of fuel duties, increasing them above European levels. As usual with him, it is very much a case of, Do as "I say, not as I do". Our pledge to the British people is to get off the fuel escalator, which is damaging and uncompetitive.
It is crass hypocrisy for the Government to talk about competitiveness and productivity while undermining them through their tax policies. It is the economics of the madhouse. There was a time when the Labour party knew something about industry, but these days very few Labour Back Benchers know anything about manufacturing. I do not think that a single Treasury Minister has ever had hands-on experience of that sector, so perhaps we should not be surprised at Ministers' not understanding the case put to them by the haulage industry, but that does not entirely excuse them.
The Government are penalising the industry not only by higher fuel taxes but by higher vehicle excise duty. Anyone can understand that raising British vehicle excise duty to make it not only the highest, but almost twice as high as the next highest in Europe, is tantamount to delivering a body blow to the industry.
For the 40-tonne articulated lorry—the workhorse of international haulage—our hauliers have to pay £5,750 a year. The figure for France is £486; for Italy, £634; and for the Netherlands, £670. The duty that the Government have imposed on the industry, in addition to the fuel escalator, is staggeringly higher.
The forum with which the industry was fobbed off at the time of the Budget has met only once, and despite what the Government said, there is no independent study on which we can rely to give an accurate comparison of costs here and on the continent.
It is wrong to say that no one will benefit from the Government's road tax policy, however: foreign hauliers certainly will. About 1 million foreign lorries will visit the United Kingdom this year and their operators cannot believe their luck. They are puzzled, amazed and in many ways delighted at the spectacle of a United Kingdom Government who are signed up to a code of conduct on unfair tax competition but create unfair competition against one of their own industries. They have created and are widening a gap that renders the British road haulage industry uncompetitive in Europe.

Mr. John Bercow: Does my right hon. Friend agree that in describing the Government's policies on these matters as "crackpot, cock-eyed and ridiculous" on 19 March 1999, the president of the Freight Transport Association, Mr. Lawrence Christensen, might conceivably have been guilty of understatement?

Mr. Heathcoat-Amory: Yes. The gentleman concerned was in fact being rather restrained: he is a great

deal ruder about the Government in private. I am sure that he will return to the subject next year if the Government persist with this lunatic tax policy, which is rendering an important British industry uncompetitive in the way that I have described.
I said that several people and sectors will benefit from the policy. I mentioned foreign hauliers, but we must not overlook foreign Treasuries. The Treasuries of France and Belgium, in particular, are massive beneficiaries, as British lorries go overseas to fill up with foreign diesel. When they make trips abroad, drivers leave the United Kingdom with empty tanks and fill up on the continent. Before they return to this country, they make sure that they fill up at foreign ports. There are five haulage firms of significant size in my constituency, one of which is Frampton's. Mr. Frampton tells me that more than half his diesel is now purchased abroad. That is a huge and continuing drain on the British Exchequer, but the Government either are unaware of it, or do not care about it.
Another group to benefit from the policy are the smugglers in Northern Ireland. The Province has a land border with another EU member state, so smugglers do not have to take a trip by ferry or the channel tunnel to reach it: they need only drive across the border and fill up their tanks. The association representing petrol retailers has estimated that the Government lose about £100 million a year through the smuggling of diesel and other fuels across that land border.
The Inland Revenue has not produced an estimate of the amount lost through that smuggling. I have asked the Government to make a stab at an estimate and to do something about what is a real problem, but to no effect. Given that much of the smuggling is done by paramilitaries, it is odd that the Government's tax policy should put illegal funds in their hands.
It has been reported that the Government are having second thoughts about the fuel escalator. Trailing changes of policy in the press instead of announcing them to the House is not unusual for the Government, but I hope that the Economic Secretary, when she replies to the debate, will confirm that the Government have changed their mind. That would be welcome, but it would be too late for many haulage firms. However, the House would have something to celebrate if the Government were to repent, even at this late stage.
Another fiasco is developing for next year—the possibility of a climate change tax. That threatens to do to the rest of industry what the fuel tax escalator has done to the haulage industry. Perhaps the Government have decided to attack only one sector of industry at a time, and will drop the fuel escalator to concentrate damage, through the climate change tax, on the rest of manufacturing industry.
The House would benefit from an explanation of the Government's intentions. One supposed virtue of the tax escalator has always been that it gives industry some warning of changes to duties and that car manufacturers and others can plan design and production. If the Government are having a rethink, as reported in the press, it should be made explicit and clear.
In anticipation of the Government's belated change of heart, we have tabled amendments to this year's Finance Bill to end the fuel tax escalator. The destruction of the haulage industry and the campaign against the private


motorist—carried out under a bogus environmental justification—have gone on too long. The amendments would end that process, and I invite the House to support them.

Mr. Stephen Dorrell: I support the amendment, and I agree with every word that my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) said about the way in which the Government have introduced their road fuel duty policy and its perverse effect on the environment and competitiveness.
Like my right hon. Friend, I seek from the Economic Secretary to the Treasury a clear statement of the Government's policy but I think that matters are even worse than he suggested. There is press speculation, presumably stimulated by loose talk in the Treasury, that the Government are rethinking their unpopular policy, but the Economic Secretary, at Treasury questions on 13 May, implied not that the policy was being rethought but that the Government intended to pursue it until 2010 if they were re-elected often enough. The price of unleaded petrol would then reach £6.90 a gallon, and diesel would be more than £7. Is that the Government's policy? Are we on an escalator from which there is no exit for a further 11 years if the electorate continue to elect the Government? Or should we believe the press speculation?
The Economic Secretary's first duty as a tax Minister is to set out clearly the Government's policy. The policy as last expounded by the Chancellor of the Exchequer—a commitment to the 6 per cent. ratchet—is misguided. It sits badly, to put it no stronger, with the implication that the Government want to reduce the tax burden, an impression that various Ministers, from the Prime Minister down, create, and that was the reason for the income tax rate cut on Budget day. The Government's rhetoric is about low tax, but they are piling on tax by stealth as fast as they dare in parts of the economy that they hope the public will not recognise or in ways that the public will tolerate without too much noise.
The Government's approach to taxation of petrol and diesel is a perfect example of stealth tax. The tax is deniable, and it need not be justified year after year because it has been pre-announced. The Government clothe themselves in the garments of tax cutting, but they have made a clear commitment to increasing the burden of taxation paid year after year by a section of the community. That is objectionable.

Mr. Leslie: As the right hon. Gentleman is talking of matters deniable, can he deny that he was in the Cabinet when the fuel duty escalator was his Government's policy? How does he reconcile the previous Government's view with his statements today?

Mr. Dorrell: I find no difficulty in reconciling the two things. To be on an escalator is not to deny the possibility of getting off. We announced a series of tax measures, but, in the present circumstances, we believe that the process has gone far enough, and I have no difficulty whatever in saying so. Presumably, the person who has gently speculated to the press that the Government may rethink the proposal equally finds no such difficulty.
My first objection to the Government's policy is that it relentlessly increases taxation on identified sections of the community. Secondly, it reveals a deep-seated prejudice against car ownership that runs right through the Government. I am not opposed to public transport, but I am vehemently against those who oppose in principle the development of private transport.
The motor car has been a huge source of wealth creation for those who build and sell cars and a huge source of freedom for those whose horizons have been widened by its flexibility. Surely the challenge to policy makers is not to dress the motor car up as a public enemy, but, through tax and regulation, to create circumstances that make it a good neighbour.
I do not understand how relentless increases in the tax on fuel redeem the obligation that rests on the Government. It is a form of intellectual slovenliness on the part of Ministers to think, "We can pander to a prejudice against the car" and that it is somehow a cost-free option. Ministers owe it to the House to be more direct and analytical and to discharge their responsibilities more seriously.
The third and perhaps the most immediate reason why I object to the Government's policy on road fuel duties is the reason that my right hon. Friend the shadow Chief Secretary emphasised in his remarks—the effect that the policy is having on the competitiveness of the British road haulage industry and of wider British industry as well. In that connection, I should probably declare an interest as a director and shareholder in a manufacturing business. The manufacturing sector perked up during my right hon. Friend's speech. It is true that all manufacturing businesses rely, at least to some degree, on the haulage sector, and I therefore have an indirect interest in the issue.
The tax policies that the Government are pursuing mean that every British road haulier is at a gradually increasing disadvantage compared with continental competitors. Year after year, the Government are creating a set of circumstances in which there is an increasing incentive for British hauliers to tank up and, in some cases, to register their vehicles overseas. Continental hauliers increasingly have the opportunity to undercut their British counterparts on journeys that involve transport between one British destination and another.
The British road haulage industry is being crucified by the Government's hostility to road transport and the use of the road vehicle is a key part of the British economy. Beyond that, it is not merely the road haulage industry but all those parts of British industry that rely on the transport of goods that are affected. In a modern economy, the link between one part of the supply chain and another is a key cost element in the build-up of total costs that is charged to the eventual consumer.
When the Government increase the cost of haulage between one plant and another within the United Kingdom, they put up not only the cost to British consumers but the price that the producer has to charge in Britain and abroad to compete against foreign competitors. It is not merely the competitiveness of the road haulage industry that is being undermined. The policy is an important source of lack of competitiveness throughout British industry and the Government are solely responsible. Therefore, it is incumbent on Ministers to explain to the House what greater good is being achieved


by that relentless and increasing burden on not only the road haulage industry but the whole fabric of British industry.

Mr. Michael Fabricant: Surely the answer to the question, "What is being achieved?" is that the Government can add taxes by subterfuge. If they tax through the Inland Revenue, the voter feels it. By doing it this way, they have achieved tax increases by stealth.

Mr. Dorrell: That is why I said earlier that I object to the policy as it is an increase in the tax burden that allows the Government, year by year, to deny that it is a tax increase brought about by the Budget, as they did in this year's Red Book. In a narrow technical sense, they are right. It was not a tax increase brought about by the Budget, because it was previously announced. However, it means that the tables in the Red Book are misleading, if they are intended to show a change in the tax burden from one tax year to another.

Mr. Bercow: Does my right hon. Friend think that, on 23 January 1995, when the hon. Member for Bristol, South (Dawn Primarolo), now the Paymaster General, complained in the Finance Bill Committee that 75 per cent. of the cost of a gallon of petrol or of diesel was accounted for by tax, it would have been helpful if she had explained that her intention, on becoming a Minister, was to increase the percentage to 85?

Mr. Dorrell: My hon. Friend makes his own point; it is a good one, and might be developed if, in response to the debate, the Economic Secretary were to set out clearly the Government's long-term intention for the escalator. The 85 per cent. to which my hon. Friend refers applies only at present. How much further is the policy to be pursued before we reach Ministers' objective?
Before I conclude my remarks, I want to mention the broader impact of the Euro-argument—to use that shorthand. We discussed that issue in Standing Committee, to the great merriment of Labour Members, who felt that those of us who favour active and positive involvement in Europe would find it difficult to engage in the debate. However, the issue clearly illustrates the principle of tax competition that should underlie our tax policy—indeed, it would be difficult to think of a better illustration. What is at stake is the use of the tax system to seek competitive advantage for this country vis-a-vis our continental neighbours.
The Government are busy making Britain uncompetitive, while a competition is taking place to which they are not responding. I believe in tax competition and that is why I think the Government should examine what their competitors elsewhere in Europe are doing; they should respond to that competitive pressure—it should apply to Governments just as it applies to everyone else in the economy.
One of the great benefits of an open liberal economy is that Governments—like every other agent—should be responsive, and should be subject to competitive pressure. The Government are answerable to a competitive marketplace, but they are not responding to the pressures exerted by that marketplace. Until they respond, our economy and those who work in it will carry a

heavier and heavier burden; they will pay for the Government's inflexibility with their jobs and their living standards.

Dr. Vincent Cable: I shall speak about the broad principles of the escalator. Yesterday, the Liberal Democrats supported several Conservative amendments. The amendments were well made and well argued; we agreed with them on their merits. However, these amendments are opportunistic and cynical in the extreme. I fully intend to support the Government on the principle of the escalator. Some genuine problems have been raised—such as the international competitiveness of the road haulage industry—to which genuine solutions were proposed in Committee and during our debates in this place. I should be interested to know how far the discussions on the Brit disc proposal have advanced.
Before I get into the meat of the subject, perhaps I can tempt Ministers to tell us more about the press reports—especially the story by Messrs Brown and Grice in The Independent. I always read Messrs Brown and Grice, because they seem to have several days' advance notice of Treasury thinking—especially the Chancellor's thinking. By reading their column, one has been able to follow the debate on economic and monetary union several days ahead of public pronouncement. Their suggestions are more than interesting. They seem to suggest that the Government are considering withdrawing the escalator—by which I think they mean the petrol rather than the diesel escalator—and replacing it, in its environmental impact, by a series of congestion charges to be levied by local authorities. That might represent a considerable advance in policy, but I do not know that for sure, because I have not seen the details. I can see that such a policy has both positive and negative implications, but let us first think a little about the positive aspects.
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Such a regime would be far more targeted than the escalator. If the rumours are true, levies would fall most heavily on areas where congestion is worst. Instead of farmers or rural families in Caithness and Sutherland having to pay much higher petrol duty, the levies would fall most heavily on congested cities, which is where most pollution is generated and where there are extra social costs resulting from congestion. Therefore, the policy would appear to be sensible.
Another positive aspect would be that the Government had adopted an approach of decentralisation, as local authorities, especially the new mayors, would be able to make their own judgments. The reports also appear to suggest, although we do not know the details, that the Government are now committed fully to the principle of hypothecating revenue from taxation on transport. Yields from the congestion taxes would be fed back into either reduced vehicle excise duty or improved public transport.
All those would be positive developments, but we cannot have an intelligent debate until we know the details of the proposals. It could be—I suspect that it is—that the Chancellor is trailing a backdown from the whole principle of environmental taxation generally. We have already seen that trend in the abandonment of the policy of shifting from gas to coal, and the proposals might herald a continuation of it. Even if we get the information a little later than Brown and Grice, we would like to hear more from Ministers about where their thinking is leading.
Let me address a few comments to the Conservatives. My belief that their amendments are rather opportunistic is based on two reasons. First, there are the revenue implications of their proposal. As I understand it, the escalator is worth roughly £1.5 billion a year, which is a substantial sum. It is incumbent on those who attack the escalator and so break the cross-party consensus on its use to explain clearly and precisely how else that sum can be funded.
Secondly, and following on from that point, if the Conservatives want to lead opinion away from the concept of the escalator—which they promoted in office, with the support of the Liberal Democrats and the then Labour Opposition—do they intend to embrace the new philosophy, which the Government appear to be considering, of having road user charges? Support for the use of congestion taxes would seem to be compatible with the Conservatives' overall philosophy. Right-wing think tanks such as the Institute of Economic Affairs and the Social Market Foundation have long argued that such measures are the right way to deal with the problem, so will the Conservatives support their use? If would be helpful to all parties if we knew that, in London, controversial new taxes to deal with the problem would command all-party support.
If the Conservatives are leading us away from the escalator, what alternatives do they propose? To make that point slightly more general, if we do not have an escalator, how is the problem of pollution to be dealt with? There are two options, of which the first is to do nothing.

Mr. Tim Loughton: I am following the hon. Gentleman's arguments with great interest. Can he explain how congestion taxes would affect freight drivers, who have to be in the centre of towns rather than in the highlands of Scotland because that is where their customers are and where they have to deliver goods to shops and factories? How would the introduction of congestion charges help them, as opposed to removing the absurdly high escalator on diesel fuel?

Dr. Cable: That is a good question. However, since we do not know whether the Chancellor's new thinking focuses on petrol duty, the diesel escalator, or both, I cannot answer it. The hon. Gentleman is quite right to say that the road haulage sector faces a set of problems that are completely different from that facing urban commuters, against whom congestion charging is primarily directed. We need to know where the Government's new thinking is leading.
To return to my basic theme, my justification for the escalator is twofold. First, it is a market-friendly way of changing policy. It sends a signal to consumers—whether road hauliers or motorists—and to industry that they should change their behaviour. It is a price signal; it is an economically efficient way of changing behaviour.
The other basic reason why the escalators—whether on road haulage or motorists—are justified is the simple "polluter pays" principle. Pollution is generated, particularly by road haulage. Most of the studies that I have seen suggest that the road haulage industry pays nothing like the social costs of its activities, which are extremely great, both in damage to the carriageway

system, especially by very heavy lorries, and in emissions, particularly of black smoke. I think that the industry accounts for about 40 per cent. of that particularly lethal emission. Social costs will not be covered unless there is a proper system of environmental taxation, which the escalator provides.

Mr. Bercow: The hon. Gentleman said a few moments ago that the escalator was a sensible, market-friendly way of seeking to change behaviour. Does he accept that, in order for it to be such a mechanism, it is necessary for consumers to be able to choose from other products—if I may use the word broadly—that are capable of being purchased in the market? If, however, there is no credible alternative, as the Paymaster General poignantly observed on 23 January 1995 in saying that most motorists in rural areas were dependent on their cars, surely the hon. Gentleman's point about the market does not apply.

Dr. Cable: The hon. Gentleman is of course exactly right: there must be an alternative. That is why I am hoping that the principle of hypothecation will emerge from new Government thinking and revenues will be returned to improve public transport, which I think meets his point. Of course, some money that goes to the Treasury comes back in order to improve provision, but the sums that have recently been allocated to rural public transport are derisory in relation to the revenue raised from it.
The other question to which the hon. Gentleman's remarks give rise is, this if we do not have a market mechanism such as taxation or congestion charges, what else can we do to change behaviour? One may do absolutely nothing, which may be what will happen. I do not know whether the Opposition are advocating merely letting taxes stagnate and trend motoring rise above the predicted rate, allowing all the pollution and greater congestion to flow from it. There is a laissez-faire solution: let us just see what happens. I hope that that would be unacceptable to most of us on environmental and broader social grounds.
Another approach is to use not the market but regulation. Instead of imposing higher taxes, we could force the motor industry to improve the standards of cars. In many respects, that is happening, and it could happen much more. I came to this House from the energy industry, in which we spent much time thinking about the future of the so-called supercar—cars built from very light materials, with much improved battery systems, fly-wheels and better engines. Enormous improvements could be made to reduce emissions and meet environmental objectives. Through regulation, the industry could be forced to advance production of such models. Of course, there is potentially a very large cost for such regulation, for which somebody must pay—probably not the industry, since it will pass the cost on to consumers.
If we want to achieve environmental objectives, we must do so either through market signals, which are taxation or congestion charges, or through regulation, for which someone must pay—or we do absolutely nothing. If the consensus between the three parties is to be broken, it is incumbent on all of us to make it absolutely clear which of those choices we will follow.

Mr. John Swinney: The hon. Member for Twickenham (Dr. Cable) made an interesting


contribution to the debate, as he did the last time that we discussed this issue on the Floor of the House in April. I am somewhat surprised and perplexed by the reasoning behind his intention to support the Government because, in April, the Liberal Democrats voted against clause 2 stand part.
When I sit in my constituency surgery, I am often aware—I suspect that I am not alone in this—that I never know what is coming when the next person steps through the door. However, when fuel taxation is being debated in the House, one knows what is coming next. In the short time for which I have been a Member, the issue has come before the House three times, in the three Budget rounds since the 1997 election. However, it is important that we consider it again today.
The difficulty in such a debate—on this point, I have some sympathy with the hon. Member for Twickenham—is that there is a slight whiff of hypocrisy about much of what is said by Conservative Members, because they invented the fuel duty escalator and applied it with vigour during their time in office. They managed to teach this Government another important trick—to tax by stealth. All the arguments that the Government use to hide behind a claim that they are lowering direct taxation while they increase indirect taxation, of which the fuel duty escalator is a strong and powerful example, were taught to them by the previous Conservative Government and their predecessors, so we need no lessons from Conservative Members on the ability to tax by stealth.
None of that, however, invalidates the substantial points that have been made. First, the fuel duty escalator represents a serious competitive impediment to many aspects of working life in this country, whether in the haulage sector or the sectors of the economy that particularly concern rural communities. Secondly, the increase in indirect and hidden taxation has a uniform and punishing effect on some of those who are least able to pay that taxation. It has already been said that we have the highest fuel prices in Europe. On current estimates, we shall be paying something like £4.30 for a gallon of petrol by the end of this Parliament if the Government continue with their plans.
Over the past few weeks, I have had the benefit of being on the campaign trail, where I have been very assiduous, in the Scottish parliamentary and European elections. I made many visits to individual companies, not only in my constituency, but in central Scotland, the south of Scotland and the highlands, and almost all the discussions that I had with them related to the increasing impediments to competitiveness caused by the increases in the fuel duty escalator. For example, a paper manufacturing company has found that its distribution costs have substantially escalated, and companies in the textiles sector are finding it difficult to get their products to market. There is a direct impact on companies' competitiveness and their ability to secure stable levels of employment.
In a debate in the House in late April, I gave the example of a company in my constituency which is emerging from difficult times. As a result of the fuel duty proposal, it faces an increase of about £10,000 in its annual costs, which is a serious burden for such a company when its employees are working very hard to improve its fortunes. That is the sharp end of the Government's proposals.
Another perspective that I want to bring to the debate is that of rural communities. I am becoming increasingly concerned about the impact of the fuel duty escalator on rural communities, particularly those that I represent. I should perhaps declare an interest because, over the summer, I shall embark on an extensive tour of my constituency which will involve lots of driving, so I should record that a lot of petrol will be put into the vehicles that I shall use.
It is important to consider the impact of the fuel duty escalator on rural communities. It has a direct impact on people who have no public transport alternative and who must own a car to go about their daily business, but I particularly want to draw to the attention of the House the impact that the fuel duty escalator has on public services.
In an area such as the one that I represent, key workers who are delivering public services—for example, home-care workers, those delivering education services and those providing health care services—are disproportionately affected by the level of fuel duty increases that we have experienced. Those increases are consequently disproportionately affecting the ability of public services to be effectively delivered and distributed in key rural areas of our community. This flows through into the prices of goods and services within the private sector and, inevitably, affects the weaker within our society. All those issues have been rather glibly thrown aside by the attachment to the fuel duty escalator that the Government have continued to display.
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One of the central issues raised by the right hon. Member for Wells (Mr. Heathcoat-Amory) and by other hon. Members, including the hon. Member for Twickenham, is the status of the Government's intention in this policy area. During the days before our previous debate on this subject, which took place on 27 April, it was suggested that the Government were going cool on the fuel duty escalator. That was before some of the substantial outbreaks of anger in the road haulage sector that we have experienced. The national transport forum has been thrown to that sector to address its concerns. The Government suggested then that they were going cold on the question of the escalator and we have heard little about it until the outbreak of the most recent speculation on the subject. The House deserves an explanation from the Government of where they stand.
It is apparent from earlier discussions that are recorded in the Official Report that the Chief Secretary has made it clear that the contents of the Red Book reflect the insistence on the application of the escalator for the remainder of the Parliament. That remains a central part of the Government's argument. We require clarification from the Economic Secretary this evening.
One of the Labour candidates in the Scottish parliamentary elections—this is someone who will be known to those who run the Labour party in Scotland because he was the candidate for the Galloway and Upper Nithsdale constituency, which I am delighted to say was retained by my hon. Friend the Member for Galloway and Upper Nithsdale (Mr. Morgan) on 6 May—said that the application of the fuel duty escalator in rural areas was a poll tax on wheels, affecting people unfairly and unjustly in rural areas and having no relationship to ability to pay. All the damning criticisms that were made of the poll tax


are equally valid when made of the poll tax on wheels that the Labour candidate for Galloway and Upper Nithsdale thought was so iniquitous.

Mr. Bercow: To the knowledge of the hon. Gentleman, is the individual concerned still a member of the official list of prospective Labour party candidates?

Mr. Swinney: That is a pretty select list and I imagine that it is difficult to get on to it. I would not venture to go anywhere near the selection process that goes on there. I advise the hon. Gentleman that he should steer well clear of the issues that bear on access to the Labour party candidates' list in Scotland. It is a secret sect if ever there was one.

Mr. Malcolm Chisholm: Will the hon. Gentleman give way?

Mr. Swinney: I must give way to someone who is—

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. Before the hon. Member for North Tayside (Mr. Swinney) is so generous, I must tell him that this fascinating mini-argument that has crept into the debate is out of order.

Mr. Swinney: I apologise, Mr. Deputy Speaker, for taking the House along an inappropriate road, if I might use that pun.
I give way to the hon. Member for Edinburgh, North and Leith (Mr. Chisholm).

Mr. Chisholm: Did the hon. Gentleman read the comment of a leading environmentalist that appears in a Scottish newspaper this morning? He says that for the Scottish National party to oppose both fuel duty increases and road user charges is the worst sort of populism and the worst sort of rubbish. What is the hon. Gentleman proposing for the environment? How can he justify the fact that SNP Members of the European Parliament are seeking to join the European Federation of Green Parties, which supports all those taxes and far more?

Mr. Swinney: If I were to talk about surrounding issues the European Parliament, Mr. Deputy Speaker, you would rule me further out of order than I was earlier.
It is important that we put in place a credible alternative that will change people's behaviour, and that has not been offered by the Government in support for the rural transport fund or by investment in public transport infrastructure. It is important also that the Government respond constructively and positively to the genuine difficulties that are now being faced by rural communities in Scotland and other parts of the United Kingdom. Nothing has been said by the Government that addresses those difficulties. The sooner we hear an answer from the Government, the better the position will be for the rural communities that are suffering disproportionately as a result of this unfair taxation.

Mr. Loughton: I support the amendments moved by my right hon. Friend the Member for Wells

(Mr. Heathcoat-Amory). As a member of the Environmental Audit Committee, I am concerned with the issues of green taxation, achieving Kyoto targets and so forth. The Economic Secretary to the Treasury, who has appeared before our Committee many times, knows our commitment to those matters. In the next week, we shall publish a report on energy efficiency, which touches on many of the subjects that we are debating today.
The measure that the amendments seek to ameliorate has nothing to do with energy efficiency and environmental conservation. The crux of the matter is the absurdity of accelerating the fuel duty escalator and then trying to dress that up as an environmental gain. In our many debates on the subject, we never hear from the Government any mention of the change in the cabotage rules that came in last July, which has completely altered the game for the freight industry in Europe and the United Kingdom.
As from last July, there is no environmental gain whatever to be had from jacking up diesel fuel duties in this country. That can only result in British lorry drivers, driving British lorries on British roads and emitting British fumes, being replaced by Belgian, French and German lorry drivers, driving Belgian, French and German lorries on British roads and emitting Belgian, French and German emissions from their lorries. Moreover, those emissions tend to be a rather poorer grade, because of the lower standards of maintenance of those lorries and the poorer quality of the fuel sold on the continent. It is utter nonsense to suggest otherwise.
The Government cannot continue to refuse to believe the evidence in front of their eyes. My right hon. Friend said that there were about 1 million lorries from Europe travelling on British roads this year. For the past three or four years, there have been 100,000 extra lorry trips a year from the continent.
I recently visited lorry drivers up in Lincolnshire. One has only to visit ports around the Humber to see the collapse in the roll on/roll off business. In the old days, foreign lorries would deposit the sealed containers at continental ports, to be brought over to the UK on ferries and picked up by British tractor vehicles and carried on to their final destination. Now continental lorries take the containers all the way through to their final destination, such is the economy of scale.
The British lorry drivers who would normally charge £1 per mile for the journey find that they are competing with continental lorry drivers who are quoting just 60p per mile for such journeys. British lorry drivers cannot compete with such a gap in margins, and no reduction in margins is being achieved by their end customers. The British lorry drivers are suffering at every point.
Eurostar is offering cheap fares for cab drivers to take their tractor vehicles over to the continent to fill up with petrol. There are also special ferry charters taking lorry drivers over to the continent just to fill up. A cheap rate overnight on a Sunday of less than £20 per metre is economically very attractive. To fill up a 1,200 litre tractor unit can save more than £600, which is well above the cost of the fares. In addition, extra lorry-miles are being created on British roads by those tractor vehicles being driven to the ports to be taken to the continent. That is utterly absurd.
What is the net effect? An enormous net loss in revenue to the UK Treasury and a net increase in revenue for the Belgian, French and German Exchequer, as well as the


Irish situation, about which we have heard. That of course means less money for the Treasury, which supposedly will hypothecate in respect of more environmentally friendly measures to encourage greater use of liquified petroleum gas to help this country to achieve its Kyoto targets, which we all want to be met.
As we have heard from my right hon. Friend the Member for Wells, the Economic Secretary constantly gets her figures wrong, and, at long last, the admission was squeezed out of her that the price of diesel fuel has increased by 13p per litre since the election. However, there still seems to be no sign of the Government acknowledging the reality of what is going on. As one of my hon. Friends has said, at Treasury questions on 13 May, she envisaged the fuel escalator continuing for a further 10 years. As if to add insult to injury, on 24 June, at the next Treasury questions, those freight drivers who wanted an end to the escalator, which we were advocating, were accused of being extremist. They were called extremist for wanting to preserve their industry and their jobs and for wanting British trucks to continue to carry British goods on British roads rather than lose out to European competitors.
Even if we put on one side all the other additional costs that the freight industry has been facing, such as the selective increases in vehicle excise duty, and the fact that new tyres will cost about £278 per axle on an 18-tyre vehicle—

Mr. Andrew Love: I thank the hon. Gentleman for giving way in the midst of painting a picture of doom and gloom. Can he tell us the level of penetration of the British market by foreign lorries?

Mr. Loughton: I have already given the figures. There has been an increase of 100,000 lorry trips a year over the past three to four years. Those are the Treasury's figures. If only one Treasury Minister would stand on a motorway and carry out a survey—[Interruption.] To be generous, a Minister could stand at the side of a motorway.
Treasury Ministers should visit a service station on a major motorway and count up the number of foreign-flagged vehicles in the car park; then they would have to admit the truth. I cannot see why they cannot carry out some basic research. If they did, they would see that the number of foreign vehicles carrying freight on our roads has increased disproportionately.
These measures also hit the smaller operators—owner-operators in particular—disproportionately, because 85 per cent. of goods vehicles in this country operate in fleets of 10 vehicles or fewer. The cost of fuel constitutes at least 40 per cent. of the overall operating costs of such operators. Things would have been even worse had it not been for the weakness in the oil price over the past year to 18 months, although that advantage is disappearing very quickly. With yesterday's news that the oil price has returned to more than $18 a barrel, it will not be long before the small element in the cost of a gallon of fuel that represents the product itself is pushed up. The overall price of fuel will increase even more, let alone the tax on top of it.
Whenever we mention those matters and the real factors that are affecting many lorry drivers in this country, the Minister starts talking about special tax concessions for cleaner lorries, for installing catalytic converters and everything else. She should try driving a

38-tonne lorry fuelled by liquified petroleum gas. She might find that the tanker required to fuel it rather bigger than the vehicle itself was, and that a large amount of fuel to be dragged along behind it. Will she start to explore the economics of catalytic converters, which cost more than £2,500 to fit, although the tax break which is supposed to encourage drivers to fit them is very much less than that? They are guaranteed for 12 months only and account for a significant drop in the fuel economy of a vehicle, yet again threatening drivers' margins.
We debated road fuel gases last night and it was interesting that the Economic Secretary claimed that Government had broadened the differential between the duties on liquified petroleum gas and on hydrocarbon fuels. She said that it was important that the gap between the duty on those two fuels had been widened, because that would encourage more people to use LPG. Of course that gap will widen if the rate for diesel fuel is jacked up at the upper end. It is absurd.
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Unless the Government accept the amendments at the last minute, the proposed measures will result in an overall loss in revenue to the Treasury without any concomitant reductions in CO2 emissions from freight traffic. Business will go to continental lorry drivers at the expense of British jobs, and UK companies will either relocate their fleets or part of their fleets to the continent or flag out to continental operators. British companies are already doing that. Indeed, firms are springing up on the back of the advice given to British lorry drivers on how to take advantage of flagging out or relocating to the continent.
As the hon. Member for North Tayside (Mr. Swinney) said, the rural community is affected, and especially community bus services in the countryside. Some months ago, the Economic Secretary talked out a private Member's Bill that would have exempted community buses from bus fuel duty. They currently have no exemption, and pay 100 per cent. of the excise duty charged on diesel fuel. I thought that we were trying to promote such bus services yet, they, along with the commercial freight drivers, will be one of the biggest victims of the proposed increase in excise duty. Those services are often run by charities and volunteers. The disabled, who rely wholly on their cars and disabled bus and taxi services in the country and town alike, will also be victims.
The Government must wake up to reality. The amendments send a clear signal that enough is enough. We need a drastic reversal of policy. It may have been appropriate five or six years ago, but it is now time to get off the escalator. If not, the measures will be self-defeating in terms of revenue raised and environmental gain. It is about time that this madness stopped.

Mr. Robert Syms: I intend to make a brief contribution.
I support amendments Nos. 40, 41 and 42. The fuel escalator raises £25 billion. It raises so much money because it is a regressive form of taxation. When designing a tax system, one should take into account not only how to raise revenue, but how to make that fair. The effect of these tax measures will be substantially different in each constituency.
In large rural areas the car is a necessity. People have to use it to maintain their quality of life—to take the children to school, to go to hospital, to go to church and to do all the basic things. In many urban areas, especially London, there are transport alternatives, but for constituents who live in villages out in the wilds of England, Wales and Scotland there is no alternative to the car. This tax will be determined more by people's postcode than by their choice of transport. It is unlikely to affect wealthier people, but it will hit poorer people in rural areas.
I was a rural county councillor. One should not presume that because people live in pretty villages they have high disposable incomes and are well off. Many people who live in villages struggle to bring up a family and keep a home together. The imposition of fuel duty year on year makes that very difficult. The Government's taxation policies are driving poorer people out of rural areas: that is happening more now than in the past 20 or 30 years. That is a pity, because many villages will end up with unbalanced communities.
I welcome the amendments. At least they have given rise to a debate, and at least they take into account the fact that a policy that is sane when it relates to one year can become insane when it is implemented year after year, and when it impacts on only certain people in certain constituencies. Some of those people may not have the largest incomes, or, indeed, the largest cars; they simply need to use the car to do basic things.
As one who represents a port, and a port that is used by road hauliers, I am very aware of the burden that the clause imposes on the road haulage industry. Road hauliers carry the vast majority of the goods that appear in our shops and supermarkets. There is no such thing as a painless tax increase, and at some point people must pay for the amount that the Government are raising—in this instance, £25 billion. The cost must be paid either by consumers through higher prices, or by road hauliers, who must try to contain their costs. They may be able to squeeze efficiency for one or two years, but that will become increasingly difficult after a period of several years, when fuel prices are constantly rising.
The road haulage industry is very competitive. Most hauliers survive on small margins. It is a problem if they have to jack up prices every year in such a competitive industry: many businesses are likely to go bust as a result, and many drivers are likely to lose their jobs. Continental hauliers have an impact on Britain. Many have 100-gallon tanks, which they fill up on the other side of the channel. They come here and unload, and look for business. Because they bought their fuel on the other side of the channel and they do not have to fill their tanks here, they can undercut British road hauliers.
As my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) pointed out, hauliers are not only contributing a great deal in fuel tax; they are contributing a great deal in vehicle excise duty. The more road hauliers go out of business on this side of the channel, the less revenue the Treasury will receive. We should take account of what happens across the channel, and I think that the amendments are at least a step in the right direction.
The hon. Member for Twickenham (Dr. Cable) described our policy as opportunistic, but I do not consider it opportunistic to stand up for country dwellers who need cars. I do not consider it opportunistic to stand up for road hauliers who carry the goods that we all want to buy, and who provide a good service for this country—efficiently, we hope—but on whom the Government's policy will impose a considerable burden.
I hope that the Economic Secretary will make clear where the Government see their policy going. I believe that, if we continue in this way, anger will erupt, people will go out of business, jobs will be lost, and people who are struggling to remain in rural villages in which they may have been born and grown up will be forced into urban areas.

Mr. Desmond Swayne: I support the amendments.
I am indebted to my hon. Friend the Member for Poole (Mr. Syms), who drew attention to the small margins on which the haulage industry is based. I wish to stress the plight of the industry in south-west Hampshire. I believe that the relationship between the environment and haulage mileage is entirely different there: indeed, its impact may be perverse in comparison with that in the rest of the country.
The difficulty is that, in south-west Hampshire, the need for haulage services is concentrated along the A31—which is in effect an extension of the M3 and M27 motorway network—down the Southampton waterside, particularly in Totton and the oil-refining area of Fawley, and along the southern strip, where population growth and the growth of enterprise are greatest.
It will no doubt have occurred to some people that the New forest lies bang in the centre of the localities to which I have drawn attention. It is the policy of Hampshire county council—many of my constituents would say that it is properly so—to prevent hauliers from travelling through the New forest. Therefore, any haulage firm that wishes to pick up business, for example, in Ringwood or on the waterside, but which is located along the southern strip must make a considerable detour, entailing much more mileage. They feel that they have made their contribution to the environment by travelling more miles than would ordinarily be the case were they not restricted by the county council's environmental policy. Now they find themselves penalised disproportionately by the escalator that has been imposed on them.
Equally, the greater mileage that hauliers are required to travel has had an effect on many of my constituents. My hon. Friend the Member for Christchurch (Mr. Chope) will be aware of the complaints of his constituents in Highcliffe and Walkford about lorries that would otherwise have travelled through Lyndhurst and Burley, but which make a large detour to avoid the New forest. His constituents, and my constituents in Sopley and along the A31, would undoubtedly welcome the extra revenue that such taxes might yield if it were invested in the road network to provide them with relief from the additional haulage traffic to which they are subjected. The legitimacy of the tax is completely undermined, however, because the prospect of bypasses, particularly around Lyndhurst, and of noise abatement measures along the A31 to allay the misery of many of the local residents, has receded.
It is precisely because of the current tax's perverse effects, and its disproportionate effect on my constituents, that I am in favour of the amendments.

Mr. Michael Jack: First, I apologise to you, and to the House, Mr. Deputy Speaker, for not being here at the start of the debate. I was following it in another part of the Palace estate and heard some of the arguments.
If I were in the Government's position and faced with a nice little earner that would yield nearly £1.7 billion extra year on year, I would sit on the Treasury Bench, try not to catch the eye of Opposition Members, and try not to look embarrassed or in any way discomfited that so much additional money was being lifted yet again from motorists.
It is almost as though the Government were trying to outdo the previous Government's efforts in their tax approach. They have looked at the escalator and thought, "That is a good idea. Let's double it. Let's really go for it," but, as always, the shoe has begun to pinch tightly. Let us look at the real-world effect of the fuel duty escalator. At one of my local garages, the price was 58p a litre before the last Budget; now, 69p or 70p is the norm. At a modest consumption of 10 gallons a week, the citizen is now paying about £225 a year more for his fuel.
I ask the Economic Secretary, if she is to reply to the debate, whether she will initiate a study of the escalator's distributional effects. For all the reasons that other right hon. and hon. Members have mentioned, many of our constituents find it impossible to adjust their motoring habits overnight. They are not financially able to buy the latest and most fuel-efficient cars to overcome the effect of extra fuel duty. They are perhaps wedded to an older and less efficient car, which may be a necessity—perhaps even a tool of the trade—for them. None the less, the Government seem disinclined to measure the regressive effect of the tax, particularly on those who are at the lower end of the salary or wage spectrum.
5.45 pm
Will Ministers therefore conduct an exercise examining the tax's full impact? If they continue operating the escalator as they have been, many low-income people will be very adversely affected—which perhaps should, if there is still a vestige of socialism among Labour Members, touch their conscience. I do not think that many people drive many frivolous miles. Most people use their cars of necessity, particularly in rural areas, about which hon. Members have already spoken.
Although the oil price may drop to $10 a barrel, the Government ensure that motorists do not receive the decrease's full benefit. I appreciate that there is a relationship between fuel price and fuel use, but, if the Government want to achieve their environmental objectives, other levers should be used rather than simply hiding behind the fuel escalator. What will happen as the oil price increases? I presume that Ministers will be happy to let motorists not only feel the full force of the fuel duty escalator but bear the full weight of any oil price increase.
Ministers cannot have their cake and eat it. Yesterday we debated the implications of vehicle excise duties and future applications—perhaps to be announced in the next Budget—of the graduated scale, which is the Government's big idea to meet their Kyoto targets. However, to achieve

the same targets, they want also to use the fuel duty escalator. Why do we need two economic measures to achieve the same target, when one will do?
The Government are using a very negative and blunt instrument to try to achieve their environmental targets, but they have also committed themselves to a different instrument. They should not have two bites at the same cherry. In trying to achieve their environmental targets, Ministers have taken a lazy approach to taxation. If they want to raise more money to meet the targets, they could do so in other ways—but they are frightened rigid of taxing anything else. Therefore, with a blunt instrument, they are going for the same old "winners", which is having a seriously regressive effect on lower-income groups. Ministers owe it to us to undertake a study to examine the policy's real impact.
I take modest comfort from thinking that Ministers may support amendment No. 40, as press reports state that the Chancellor is getting cold feet on the issue. However, I suppose that, being a Scot, he would rather have the money than show even a little generosity to hard-pressed motorists, many of whom are suffering from the Government's anti-road, anti-car policies. Motorists are stuck in traffic jams, spending even more money on fuel and adding to the Government's coffers. I suppose that that is the new stationary method of raising taxes.
The Government need very carefully to consider this sphere of taxation. I think that a report on the escalator's impact on individuals, compared with its impact on the environment, would help greatly to clarify Government policy.

Mr. Nick St. Aubyn: I do not know whether the Economic Secretary is a fan of George Gershwin, but, judging by her previous statements on the escalator, I should not be surprised to see her standing at the Dispatch Box singing, "I'll build a stairway to paradise". Nevertheless, as we have heard in the debate, the truth is that the Government are building a treadmill to ruin for businesses across the United Kingdom.
We heard from the hon. Member for North Tayside (Mr. Swinney) how the previous Conservative Government's success in attracting funding for Scotland's infrastructure—thereby revitalising so many of its regions—is now being undermined by the ever-increasing cost of getting products made in Scotland to their markets. That is the extent of the damage being done by this serious increase in taxation.

Mr. Swinney: The electorate's conclusions about the great success of the Conservative Administration were shown on 1 May 1997, when the Conservatives failed to win any seat within Scotland. Perhaps that little piece of information will be a part of the hon. Gentleman's recollections about Scottish politics.

Mr. St. Aubyn: We well know that the Conservative party bequeathed to the country, including Scotland, a golden economic legacy. There were other reasons why we lost that election, but the reasons for the legacy will be the reasons why we will win power again.
If the Government increase taxation without a thought-through strategy, they will hurt business and destroy jobs, and the tax increases will become self-defeating. That is the stage we are reaching with the so-called fuel escalator.
In my part of the country, people do not have a choice to whether or when to use their cars. They are busy people who have to get to work and who have to use the transport that is available and—as in many other parts of the country—that means the motor car. It is no good telling them to put all their freight on rail. They need to use the road transport network which has been built up over so many years.
I was struck by the way in which in a recent exchange with me, the Minister for Transport patted herself on the back for having announced a £5 million noise reduction fund—£5 million across the country to reduce noise is a paltry sum when the Government, as a result of their increments in taxation on the motorist, are raising an extra £12 billion from motorists during this Parliament.
If the Government were to use a modest increase in road duty to improve our road network by imaginative noise reduction measures, better surfaces or schemes to encourage road traffic to use main roads—and not to disrupt the lives of many people by driving heavy lorries through villages—at least some benefit would flow back to our constituents who are paying these high costs. The Government do not intend to do that. The reason why the Conservative party is opposed to high taxation in principle is that Governments who increase tax simply tend to hoard the money, and do not have the imagination to put it to good use. That is why we need to stop the increases in road fuel taxes. We need to stop and think before we use these extra taxes simply to force businesses into ruin. Any money must be put to good use for the real transport needs of our country.

The Economic Secretary to the Treasury (Ms Patricia Hewitt): This has been a lively and interesting debate—albeit one perhaps inevitably, has gone over familiar ground. It might help if I reminded the House of the origins of the fuel duty escalator, which was introduced by the Conservative Government in 1993. It was set initially at 3 per cent., but raised in the same year to 5 per cent. With the exception of some references in one or two speeches from Conservative Members, one would never have thought so.
The escalator was inherited by us, confirmed by us and increased to 6 per cent. in 1997. The fuel duty escalator was right when the Conservative Government introduced it—I am prepared on this occasion to give them the credit for it, even though they have since abandoned the policy—and it is still right today.

Mr. Dorrell: Will the Economic Secretary complete that statement of policy? For how long will it be right?

Ms Hewitt: As we said in the "Financial Statement and Budget Report" the escalator will be applied in future Budgets. Our environmental assessment is that if the road fuel duty escalator is continued until 2002, it will, by 2010, save between 2 million and 5 million tonnes of carbon—an extremely significant contribution towards our Kyoto targets.

Mr. Jack: Will the Economic Secretary give me an undertaking that she will publish the details of how that calculation was arrived at?

Ms Hewitt: The calculation was based on the models used by the Treasury and the Department of the

Environment, Transport and the Regions. We referred to that in the environmental impact assessment table in the Budget documentation. There is nothing further that I can add. However, if any further technical details will assist the right hon. Gentleman, I will let him have them.
The reduction in greenhouse gases was for the Conservative party and is for this Government the first and continuing justification for the fuel duty escalator. However, there is a second justification—the contribution that the fuel duty escalator makes, by constraining the growth in demand for road transport that would otherwise take place, to improving local air quality and thus people's health.
Last night, Conservative Members posed as the friends of health and the opponents of air pollution. The right hon. Member for Fylde (Mr. Jack) moved amendments on road fuel gases, and referred to the problems of
fine particulates PM10s, which have a demonstrated link with respiratory and cardiovascular disease, and to oxides of nitrogen, which can damage the lungs and play a part in summer smog episodes. These emissions currently result from the use of petrol engines".—[Official Report, 5 July 1999; Vol. 334, c. 770.]
The right hon. Gentleman was absolutely right. He referred later to benzine emissions from petrol, which cause health risks.
Let me remind the House of those health risks and the contribution to them from the emissions from cars and lorries. In 1996, airborne particulates in urban areas brought forward more than 8,000 deaths, and either caused or brought forward more than 10,000 hospital admissions for respiratory diseases. Road transport is one of the major sources of those particulates. Across the country, road transport contributes about a quarter of the total emissions of particulates. In London, where the problem is most severe, nearly 80 per cent. of those particulates—about which the right hon. Member for Fylde was so concerned last night—come from road transport.
Road transport is responsible for nearly half the emissions of nitrogen oxide. In London, where the problem is at its worst, it accounts for nearly three quarters of emissions.

Mr. St. Aubyn: By how much has traffic been reduced in London since the Government increased the amount of the escalator?

Ms Hewitt: The escalator has ensured that the demand for petrol, and therefore the emissions from petrol and diesel-powered engines, has reduced by 0.1 per cent. compared with a year ago, and is somewhat lower than it was more than 10 years ago. Compared with the scenarios that we could have anticipated in the absence of the escalator, that is an important constraint upon the increase in road transport and pollution.
Opposition Members were concerned last night about people's health. Today, they are concerned only about people driving cars and lorries. It is worth remembering that particulates from diesel engines are responsible for a large number of those premature deaths and hospital admissions for bronchial and respiratory diseases.
I remind the House of the remarks of the former Chancellor, the right hon. and learned Member for Rushcliffe (Mr. Clarke), who said—quite rightly—that hon. Members who sought to support the Kyoto targets


and to show concern for people's health and the impact on health of road transport-generated pollution, and who simultaneously opposed the fuel duty escalator, were sailing dangerously close to hypocrisy.
6 pm
Several hon. Members spoke about the road haulage industry. I commend the remarks of the hon. Member for Twickenham (Dr. Cable), who rightly referred to several studies that strongly suggest that the road haulage industry is contributing considerably less than the total cost of the social and environmental penalties that it imposes on this country. Of course, the industry's competitiveness is taken into account when the Government set diesel duty rates and vehicle excise duty, but the duty on diesel also reflects valid environmental and health concerns which I would have hoped by Conservative Members were shared.
My right hon. Friend the Chancellor and I have often stressed that, in considering the industry's competitiveness, we must take into account not only our fuel duty and VED, but our total package of business costs. Thanks to the Government, we now have the lowest rate of corporation tax of any major European Union country. Our non-wage labour costs are generally lower than those in our competitor countries. The small companies rate of corporation tax was cut to 20 per cent. in the Budget and a 10 per cent. rate was introduced for the smallest companies.
We have cut VED for the cleanest lorries by £1,000, and in response to a request from the industry we have made it easier for vehicles to change their licence category to become eligible for the lowest possible rate of VED to suit the loads that they bear.
In response to the industry's concerns, we set up the road haulage forum, which will meet again under the chairmanship of my right hon. Friend the Minister for Transport later this month. At the request of right hon. and hon. Members, we are considering the specific question of the Euro vignette scheme, although I stress again that the scope for such a scheme is severely constrained by a European directive to which the previous Government committed us.
There is considerable evidence of overcapacity in the haulage industry. A third of total mileage is run empty and the supermarkets have achieved enormous improvements in fuel efficiency and loadage, which shows that we are giving the industry absolutely the right incentive, partly through the road fuel duty escalator, to ensure that it makes much more efficient use of its fuel.
A recent study by the energy efficiency best practice programme shows that only a third of commercial fleet managers know how much they spend on fuel and only a third have active policies to improve fuel efficiency. The escalator should go some way towards the extremely necessary goal of improving that record.
One damaging effect of the amendments is that they would reduce the duty incentive for clean ultra-low sulphur diesel to just over 2p a litre. We have seen clearly that the trade needed the 3p differential that we introduced in the March Budget, as it enables ultra-low sulphur diesel to be offered at the same pump price as conventional diesel. In February, clean diesel was only 41 per cent. of the diesel market; by June, that had already increased to 96 per cent. We have put in place the right duty

differential and ensured that virtually all diesel now sold in this country is environmentally friendly. That has been a resounding success, and the amendments would go back on our promise to the oil industry to maintain the differential.
The amendments would backdate the reduction in rates to Budget day on 9 March, which would necessitate our repaying about £300 million to the oil industry. I am not sure that the Opposition have begun to think about how that could be administered or how one could insist that the reduction was passed back to the motorists on whom the increase was imposed.
As we have come to expect from the Conservatives, their refusal to abide by the policy that they rightly adopted in government and their opportunistic decision to abandon it, as the hon. Member for Twickenham said, mean that there is a black hole of about £5 billion in their spending plans.
Perhaps the right hon. Member for Wells (Mr. Heathcoat-Amory) will tell us how he proposes to fill that hole and whether he believes that the resultant cuts should fall on the health service, on schools or on some other part of public spending. I hope that he will tell us how he would achieve the Kyoto and other greenhouse gas targets and the improvements in people's health, of which many Conservative Members have spoken, in the absence of this highly effective and well-justified policy. I urge my hon. Friends to oppose the amendment unless, as I hope, the right hon. Gentleman decides to withdraw it.

Mr. Heathcoat-Amory: The facts of the issue are not seriously in dispute. The road fuel duty escalator is now well past the point at which it had an environmental justification and is doing severe damage to the private motorist and the road haulage industry. It is part of the Government's totally unnecessary war on the private motorist and it is making an important industry uncompetitive in Europe.
The Government first chose to deny those facts and they now choose to ignore them. We do not ignore them and we will now vote to reverse the damage by supporting the amendment, which would cut the escalator back to the rate of the retail prices index.

Question put, That the amendment be made:—

The House divided: Ayes 135, Noes 355.

Division No. 224]
[6.8 pm


AYES


Ainsworth, Peter (E Surrey)
Bums, Simon


Amess, David
Cash, William


Ancram, Rt Hon Michael
Chapman, Sir Sydney (Chipping Barnet)


Arbuthnot, Rt Hon James
Chope, Christopher


Atkinson, Peter (Hexham)
Clappison, James


Beggs, Roy
Clark, Dr Michael (Rayleigh)


Bercow, John
Clifton—Brown, Geoffrey


Beresford, Sir Paul
Collins, Tim


Blunt, Crispin
Colvin, Michael


Body, Sir Richard
Cormack, Sir Patrick


Boswell, Tim
Gran, James


Bottomley, Peter (Worthing VV)
Curry, Rt Hon David


Bottomley, Rt Hon Mrs Virginia
Davies, Quentin (Grantham)


Brazier, Julian
Davis, Rt Hon David (Haltempdce)


Brooke, Rt Hon Peter
Dorrell, Rt Hon Stephen


Browning, Mrs Angela
Duncan, Alan


Bruce, Ian (S Dorset)







Duncan Smith, Iain
May, Mrs Teresa


Evens, Nigel
Morgan, Alasdair (Galloway)


Faber, David
Moss, Malcolm


Fabricant, Michael
Nicholls, Patrick


Fallon, Michael
Norman, Archie


Flight, Howard
Ottaway, Richard


Forsythe, Clifford
Page, Richard


Forth, Rt Hon Eric
Paice, James


Fowler, Rt Hon Sir Norman
Prior, David


Fox, Dr Liam
Randall, John


Fraser, Christopher
Redwood, Rt Hon John


Gale, Roger
Robathan, Andrew


Gamier, Edward
Robertson, Lauerence (Tewk'b'ry)


Gibb, Nick
Roe, Mrs Marion (Broxboume)


Gillan, Mrs Cheryl
Ross, William (E Lond'y)


Gorman, Mrs Teresa
Ruffley, David


Gary, James
St Audyn, Nick


Green, Damian
Shepherd, Richard


Greenway, John
Simpson, Keith (Mid—Norfolk)


Gummer, Rt Hon John
Soames, Nicholas


Hague, Rt Hon William
Spelman, Mrs Caroline


Hamilton, Rt Hon Sir Archie
Spicer, Sir Michael


Hammond, Philip
Spring, Richard


Hawkins, Nick
Stanley, Rt Hon Sir John


Heald, Oliver
Steen, Anthony


Heathcoat—Amory, Rt Hon David
Streeter, Gary


Hogg, Rt Hon Douglas
Swayne, Desmond


Horam, John
Swinney, John


Howard, Rt Hon Michael
Syms, Robert


Howarth, Gerald (Aldershot)
Tapsell, Sir Peter


Jack, Rt Hon Michael
Taylor, Iain (Esher & Walton)


Jackson, Robert (Wantage)
Taylor, John M (Solihull)


Jenkin, Bemard
Tylor, Sir Teddy


Jones, leuan Wyn (Ynys Môn)
Townend, John


Key, Robert
Tredinnick, David


King, Rt Hon Tom (Bridgwater)
Trend, Michael


Kirkbride, Miss Julie
Viggers, Peter


Leigh, Edward
Wardle, Charles


Letwin, Oliver
Wells, Bowen


Lewis, Dr Julian (New Forest E)
Welsh, Andrew


Livsey, Richard
Whitney, Sir Raymond


Lloyd, Rt Hon Sir Peter (Fareham)
Whittingdale, John


Lloyd, Elfyn
Wigley, Rt Hon Dafydd


Loughton, Tim
Willetts, David


Luff, Peter
Wilshire, David


MacKay, Rt Hon Andrew
Winterton, Mrs Ann (Congleton)


Maclean, Rt Hon David
Winterton, Nicholas (Macclesfield)


McLoughlin, Patrick
Woodward, Shaun


Madel, Sir David
Young, Rt Hon Sir George


Malins, Humfrey



Maples, John
Tellers for the Ayes:


Mates, Michael
Mrs, Jacqui Lait and


Maude, Rt Hon Franics
Mrs, Eleanor Laing.


NOES


Abbott, Ms Diane
Bell, Stuart (Middlesbrough)


Adams, Mrs Irene Paisley N)
Benn, Hilary (Leeds C)


Ainger, Nick
Benn, Rt Hon Tony (Chesterfield)


Ainsworth, Robert (Cov'try NE)
Bennett, Andreew F


Alexander, Douglas
Benton, Joe


Allan, Richard
Bermingham, Gerald


Allen, Graham
Berry, Roger


Anderson, Janet (Rossendale)
Best, Harold


Ashton, Joe
Betts, Clive


Atherton, Ms Candy
Blackman, Liz


Atkins, Charlotte
Blears, Ms Hazel


Austin, John
Blizzard, Bob


Baker, Norman
Bradley, Peter (The Wrekin)


Bames, Harry
Brake, Tom


Barron, Kevin
Brand, Dr Peter


Battle, John
Breed, Colin


Bayley, Hugh
Brinton, Mrs Helen


Beard, Nigel
Brown, Rt Hon Nick (Newcastle E)


Beckett, Rt Hon Mrs Margaret
Brown, Russell (Dumfries)


Begg, Miss Anne
Browne, Desmond


Beith, Rt Hon A J
Bruce, Malcolm (Gordon)





Buck, Ms Karen
Foster, Michael J (Worcester)


Burden, Richard
Fyfe, Maria


Burgon, Colin



Burstow, Paul
Galloway, George


Butler, Mrs Christine
Gapes, Mike


Byers, Rt Hon Stephen



Cable, Dr Vincent
Gardiner, Barry


Campbell, Alan (Tynemouth)
Gerrard, Neil


Campbell, Mrs Anne (C'bndge)
Gibson, Dr Ian


Campbell, Ronnie (Blyth V)



Campbell—Savours, Dale
Gilroy, Mrs Linda


Cann, Jamie
Godman, Dr Norman A


Caplin, Ivor
Godsiff, Roger


Casale, Roger



Caton, Martin
Goggins, Paul


Cawsey, Ian
Golding, Mrs Llin


Chapman, Ben (Wirral S)
Gordon, Mrs Eileen


Chaytor, David



Chisholm, Malcolm
Gorrie, Donald


Clapham, Michael
Griffiths, Jane (Reading E)


Clark, Rt Hon Dr David (S Shields)



Clark, Paul (Gillingham)
Griffiths, Nigel (Edinburgh S)


Clarke, Charles (Norwich S)
Griffiths, Win (Bndgend)


Clarke, Rt Hon Tom (Coatbndge)
Grogan, John


Clarke, Tony (Northampton S)



Clelland, David
Gunnell, John


Coaker, Vernon
Hain, Peter


Coffey, Ms Ann
Hall, Mike (Weaver Vale)


Coleman, lain



Colman, Tony
Hall, Patrick (Bedford)


Connarty, Michael
Hamilton, Fabian (Leeds NE)


Cooper, Yvette
Hancock, Mike


Corbett, Robin



Corbyn, Jeremy
Hanson, David


Cotter, Brian
Harman, Rt Hon Ms Harriet


Cousins, Jim



Cryer, Mrs Ann (Keighley)
Harvey, Nick


Cryer, John (Hornchurch)
Heal, Mrs Sylvia


Cummings, John
Healey, John


Cunliffe, Lawrence



Cunningham, Jim (Cov'try S) 
Hepburn, Stephen


Curtis—Thomas, Mrs Claire
Hesford, Stephen


Dalyell, Tam
Hewitt, Ms Patricia


Darling, Rt Hon Alistair



Darvill, Keith
Hill, Keith


Davey, Edward (Kingston)
Hinchliffe, David


Davey, Valerie (Bristol W)
Hodge, Ms Margaret


Davies, Geraint (Croydon C)



Davis, Terry (B'ham Hodge H)
Hoey, Kate


Dawson, Hilton
Home Robertson, John


Dean, Mrs Janet
Hope, Phil


Denham, John



Dismore, Andrew
Hopkins, Kelvin


Dobbin, Jim
Howarth, Alan (Newport E)


Dobson, Rt Hon Frank



Doran, Frank
Howarth, George (Knowsley N)


Dowd, Jim
Hoyle, Lindsay


Drew, David
Hughes, Ms Beverley (Stretford)


Dunwoody, Mrs Gwyneth
Humble, Mrs Joan


Eagle, Angela (Wallasey)



Eagle, Maria (L'pool Garston)
Hurst, Alan


Edwards, Huw
Hutton, John


Efford, Clive



Ellman, Mrs Louise
Iddon, Dr Brian


Ennis, Jeff
Illsley, Eric


Etherington, Bill
Jackson, Ms Glenda (Hampstead)


Fearn, Ronnie



Field, Rt Hon Frank
Jackson, Helen (Hillsborough)


Fisher, Mark
Jamieson, David


Fitzpatrick, Jim



Flint, Caroline
Jenkins, Brian


Flynn, Paul
Johnson, Alan (Hull W & Hessle)


Follett, Barbara
Johnson, Miss Melanie


Foster, Rt Hon Derek



Foster, Don (Bath)
(Welwyn Hatfield)


Foster, Michael Jabez (Hastings)
Jones, Barry (Alyn & Deeside)






Jones, Mrs Fiona (Newark)
Olner, Bill


Jones, Ms Jenny (Wolverh'ton SW)
O'Neill, Martin


Jones, Jon Owen (Cardiff C)
Öpik, Lembit


Jones, Dr Lynne (Selly Oak)
Organ, Mrs Diana


Jones, Martyn (Clwyd S)
Osborne, Ms Sandra


Jowell, Rt Hon Ms Tessa
Palmer, Dr Nick


Kaufman, Rt Hon Gerald
Pearson, Ian


Keen, Alan (Feltham & Heston)
Pendry, Tom


Keen, Ann (Brentford & lsleworth)
Perham, Ms Linda


Keetch, Paul
Pickthall, Colin


Kelly, Ms Ruth
Pike, Peter L


Kemp, Fraser
Plaskitt, James


Khabra, Piara S
Pollard, Kerry


Kidney, David
Pope, Greg


King, Andy (Rugby & Kenilworth)
Pound, Stephen


King, Ms Oona (Bethnal Green)
Prentice, Ms Bridget (Lewisham E)


Kingham, Ms Tess
Prentice, Gordon (Pendle


Kumar, Dr Ashok
Primarolo, Dawn


Ladyman, Dr Stephen
Prosser, Gwyn


Lawrence, Ms Jackie
Purchase, Ken


Laxton, Bob
Quin, Rt Hon Ms Joyce


Lepper, David
Quinn, Lawrie


Leslie, Christopher
Radice, Giles


Levitt, Tom
Rapson, Syd


Lewis, Ivan (Bury S)
Reed, Andrew (Loughborough)


Lewis, Terry (Worsley)
Reid, Rt Hon Dr John (Hamilton N)


Liddell, Rt Hon Mrs Helen
Robinson, Geoffrey (Cov'try NW)


Linton, Martin
Roche, Mrs Barbara


Lloyd, Tony (Manchester C)
Rooker, Jeff


Lock, David
Rooney, Terry


Love, Andrew
Rowlands, Ted


McAllion, John
Roy, Frank


McAvoy, Thomas
Ruane, Chris


McCabe, Steve
Ruddock, Joan


McCafferty, Ms Chris
Russell, Bob (Colchester)


McCartney, Rt Hon Ian (Makerfield)
Russell, Ms Christine (Chester)


Macdonald, Calum
Ryan, Ms Joan


McDonnell, John
Salter, Martin


McGuire, Mrs Anne
Sanders, Adrian


Mclsaac, Shona
Sarwar, Mohammad


McNamara, Kevin
Savidge, Malcolm


McNulty, Tony
Sawford, Phil


MacShane, Denis
Sedgemore, Brian


Mactaggart, Fiona
Shaw, Jonathan


McWalter, Tony
Sheerman, Barry


McWilliam, John
Sheldon, Rt Hon Robert


Mahon, Mrs Alice
Shipley, Ms Debra


Mallaber, Judy
Simpson, Alan (Nottingham S)


Mandelson, Rt Hon Peter
Singh, Marsha


Marsden, Gordon (Blackpool S)
Skinner, Dennis


Marsden, Paul (Shrewsbury)
Smith, Angela (Basildon)


Marshall, Jim (Leicester S)
Smith, Miss Geraldine (Morecambe & Lunesdale)


Martlew, Eric
Smith, Jacqui (Redditch)


Maxton, John
Smith, Llew (Blaenau Gwent)


Meacher, Rt Hon Michael
Snape, Peter


Meale, Alan
Soley, Clive


Merron, Gillian
Southworth, Ms Helen


Michie, Bill (Shef'ld Heeley)
Spellar, John


Milburn, Rt Hon Alan
Squire, Ms Rachel


Mitchell, Austin
Starkey, Dr Phyllis


Moffatt, Laura
Steinberg, Gerry


Moonie, Dr Lewis
Stevenson, George


Moran, Ms Margaret
Stewart, David (Inverness E)


Morgan, Ms Julie (Cardiff N)
Stewart, Ian (Eccles)


Morley, Elliot
Stoate, Dr Howard


Morris, Rt Hon John (Aberavon)
Strang, Rt Hon Dr Gavin


Mullin, Chris
Straw, Rt Hon Jack


Murphy, Denis (Wansbeck)
Stringer, Graham


Murphy, Jim (Eastwood)
Stuart, Ms Gisela


Naysmith, Dr Doug
Stunell, Andrew


Oaten, Mark
Sutcliffe, Gerry


O'Brien, Bill (Normanton
Taylor, Rt Hon Mrs Ann (Dewsbury)


O'Brien, Mike (N Warks)
Taylor, Ms Dad (Stockton S)


O'Hara, Eddie
Taylor, David (NW Leics)





Taylor, Matthew (Truro)
White, Brian


Temple—Morris, Peter
Whitehead, Dr Alan


Thomas, Gareth (Clwyd W)
Wicks, Malcolm


Thomas, Gareth R (Harrow W)
Williams, Rt Hon Alan (Swansea W)


Timms, Stephen
Williams, Alan W (E Carmarthen)


Tipping, Paddy
Williams, Mrs Betty (Conwy)


Todd, Mark
Wills, Michael


Tonge, Dr Jenny
Wilson, Brian


Trickett, Jon
Winnick, David


Turner, Dennis (Wolverh'ton SE
Winterton,Ms Rosie (Doncaster C)


Turner, Dr Desmond (Kemptown)
Wise,Audrey


Turner, Dr George (NW Norfolk)
Wood Mike


Twigg, Stephen (Enfield)
Wray, James


Vaz, Keith
Wright, Anthony D (Gt Yarmouth)


Vis, Dr Rudi
Wright, Dr Tony (Cannock)


Walley, Ms Joan



Wareing, Robert N
Tellers for the Noes:


Watts, David
Jane Kennedy and


Webb, Steve
Mr. Kevin Hughes.

Question accordingly negatived.

Clause 40

MEANING OF CONDITIONAL INTERESTS IN SHARES

Dr. Cable: I beg to move amendment No. 30, in page 21, line 4, leave out subsection (7) and insert—
'(7) The amendments made by this section shall be deemed always to have had effect'.
This technical matter was pursued at length in Committee, but I should like to take it a little further. It arises from a measure against tax avoidance that was designed to stop people converting remuneration into shares, thereby exempting themselves from higher rates of income tax. That measure fell on a particular class of companies—unquoted companies that frequently pay employees or directors in shares that must be transferred when the employee or director leaves the company.
That presented a problem for those people, who would have to pay taxes at higher rates on valid and welcome forms of employee share ownership because of the attempt to clamp down on tax avoidance. The Finance Act 1998 attempted to address the problem by exempting people when the arrangement was built into the company's articles of association. However, it is clear from discussions with the Inland Revenue that the exemption was too narrowly drawn. Many people were caught out who had acquired shares as a result of employee contracts, or because they worked for a subsidiary—unlike the fat cats who work for main companies.
Clause 40 is designed to narrow further the range of the anti-avoidance measure, and is generally welcome as it allows exemptions to be extended to people who work for subsidiary companies. However, the exemption is limited to people who bought shares after Royal Assent was granted to last year's Finance Act. It still catches a substantial number of people innocently involved in employee share ownership schemes who purchased their shares long ago.
The amendment would therefore apply the anti-avoidance measure retrospectively. Little revenue is involved, though if the sum is more substantial, the Treasury should give us some figures. The amendment cannot conceivably be construed as doing anything to encourage tax avoidance as it applies to decisions already taken. It is a reasonable technical suggestion to widen the scope of the exemption already accepted in principle by


the Government in a way that will meet the concerns of those who are trying to promote employee share ownership in a specific category of companies.

Mr. Howard Flight: Clause 40 and the Liberal Democrat amendment are the fruits of excessive zeal in anti-avoidance measures, the complication of which has resulted in mistakes by the Government. The amendment is broadly correct, as the administration of clause 40 would be a nightmare for the Inland Revenue during the year in which an unfair tax rule existed, but it sets a precedent with which we are uncomfortable by making tax matters retrospective, even though it favours individuals. However, we cannot see how clause 40 will operate smoothly without it, unless the Revenue acts as if it had been included in the Bill.
Where companies pay individuals in shares subject to later forfeiture—which creates a difficulty in valuing the benefit and the income tax that arises—special rules apply. When the original provisions were drafted in 1988, cases in which an employee dismissed for misconduct had to sell the shares at a discount were not included, but those cases were included in the special rules last year. Those people are in a tax situation different from the deliberately advantageous situation in which shares become forfeit in order to avoid charges to income tax. The tidying up of parts of last year's Act made the mistake of including a charge to income tax that no reasonable person would have considered.
We are glad that the Government are correcting that error in clause 40. However, do they intend the Revenue to be lumbered with the unintended law for a year, or will the Revenue operate as if the mistake had not happened, even if the amendment is not accepted?

Mr. Fabricant: I, too, support the amendment and welcome clause 40. The clause is a small demonstration of the Government's so-called commitment to a stakeholding society, although they are also attacking fat cats and claiming that anyone who enjoys the fruits of the company for which he or she works is a fat cat. There is a fundamental inconsistency there.
It is wholly wrong that clause 40 should become operational from a particular future date. It should be backdated. It should, indeed, have gone further. When in Opposition, Government Members criticised our Finance Acts, claiming that share and profit participation schemes were not lawful, and that profit schemes were being abused. There were instances of that, for example, one at Nottingham university, which was quoted by my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke). A shell company was set up and people were paid through dividends rather than wages.
6.30 pm
Assurances were given before the last general election to companies such as the John Lewis Partnership, which I do not think any hon. Member would accuse of operating a scheme to make use of a tax loophole and which has suffered as a consequence. Everyone who works for the John Lewis Partnership is designated as a partner. At the end of the year, instead of a dividend being declared, a proportion of salary is declared as a bonus,

which is distributed among all the workers. If that is not a good example of a stakeholding society, I do not know what is.
I clearly remember during debates on the Finance Bill before the last general election Labour Members pledging that if a Labour Government were elected they would restore tax-exempt status to profit-sharing schemes such as that operated by the John Lewis Partnership, which is a bona fide scheme. Now, two years into a Labour Government, what do we see? The stakeholding society is merely another spin. There has been no deed and the Government have not attempted to reinstate that profit-sharing scheme. That is another empty promise—another promise unfulfilled and another group of people who feel betrayed as a consequence.
Will the Minister, who was not in the House prior to the general election, look through the Hansard of our debates on that Finance Bill, see the promises that were made and undertake on her word of honour that bona fide profit-sharing schemes will be reinstated as tax exempt? There is no logic in introducing clause 40 into the Bill without introducing the sort of scheme that I just mentioned.
The Labour Government claim that they are no longer against fat cats. They hope that fat cats will vote for them. They claim that they want a stakeholding society. Yet when companies generate the very conditions that provide such a society, the Government, either through their inaction or action, work against them. That is hypocrisy, betrayal and spin of the worst kind.

Ms Hewitt: I draw the hon. Gentleman's attention to the commitment made in the Budget by my right hon. Friend the Chancellor, both to introduce new tax regulations for employee share ownership schemes, which will make it the most generously tax relieved form of employee share ownership in this country and to introduce a new enterprise management incentive, which is directed particularly towards new and start-up companies. We are more than fulfilling our pledge to promote stakeholding by employees.

Mr. Fabricant: Will the hon. Lady give way?

Ms Hewitt: No. If the hon. Gentleman will forgive me, I would rather deal with the amendments to clause 40. It is fair to say that he strayed somewhat wide of those.
As the hon. Member for Twickenham (Dr. Cable) said, clause 40 adds two new cases to the categories of shares that are specifically excluded from the special tax rules that were introduced in the Finance Act 1998. Those excluded cases are, instead, taxed in line with general tax rules. The amendment would make the change retrospective to last year.
A similar amendment was tabled in Committee and was spoken to by the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb). I asked him to withdraw it on the ground that it would be wrong to present an unexpected tax bill to some employees. He agreed to do so on the basis of my statement to the Committee, which he described as "full, frank and helpful". I always seek to be full, frank and helpful.
My concern at that time was that making the changes retrospective, while it would be beneficial for the majority, might result in some employees receiving a


larger tax bill. That is because the value of shares can go down as well as up. If an employee had been awarded shares since 17 March 1998 that were subject to a risk of forfeiture that could not last for more than 5 years and the shares had fallen in value, the tax charge would, in the absence of retrospective exemption, be on a lower value than would be the case under general tax rules.
In most cases, however, the opposite would apply: the shares would have increased in value and the employee would be better off with retrospection. Because of the possible risk that a few people might be worse off, it seemed better on balance not to make the clause retrospective.
The debate in Committee was helpful and since then several advisers have shown us examples of cases where ordinary employees will be disadvantaged unfairly by the absence of retrospection. In one case, the directors of a company were offered shares subject to the risk of forfeiture in February 1998, before the special rules in section 140A apply. Any subsequent increase in the value of those shares will therefore be taxed as a capital gain.
However, similar shares were awarded to all the employees of the company in April 1998. Those fall within the special rules of section 140A with the result that when they sell their shares the employees will have to pay income tax on any subsequent increase in their value. For most employees that will mean a real cost as the annual capital gains tax exemption would normally cover their gain.
Therefore, the employees end up being treated far more harshly than the directors of the company who acquired their shares a month earlier. If the employees were awarded the same shares after Royal Assent, they would be covered by the exemption provided by clause 40 and would be treated the same as the directors. Therefore, employees who were awarded shares between 17 March 1998 and when this Bill is enacted would be treated more harshly than any employees receiving exactly the same shares both before and after those dates. We have also reached the conclusion that many of those affected will simply not be aware that they are in that unfortunate position.
Therefore, like the hon. Member for Arundel and South Downs (Mr. Flight), I think that on this occasion there is a convincing argument that we should set aside our normal concerns about retrospective legislation and the problems to which it can give rise. I am therefore happy that we should adopt the common-sense solution which is clearly fairer to most employees. I am grateful to hon. Members and those advisers who have brought those cases to our attention and I am happy to accept the amendment.

Amendment agreed to.

Clause 45

PROVISION AND SUPPORT OF BUS SERVICES

Ms Hewitt: I beg to move amendment No. 3, in page 24, line 21, leave out 'large'.

Mr. Deputy Speaker (Mr. Michael J. Martin): With this, it will be convenient to discuss Government amendments Nos. 4 to 12.

Ms Hewitt: These amendments deal with the minimum seating capacity for the works bus exemption and related

matters. We had an extremely helpful debate on the subject in Committee and hon. Members raised various matters there on which I promised to reflect further. I have done so and these amendments are a consequence of that further consideration—further proof that this Government do listen and respond.
Amendments Nos. 3 and 4 would reduce the minimum seating capacity requirement for the works bus exemption from 17 to 12. Several of the amendments moved in Committee sought to reduce our initial figure of 17. As I explained in Committee, the reason for a high seating test is simply to prevent the exemption being siphoned off, notably to family companies where husband and wife directors provide themselves with a large family vehicle, via the company, to take the two of them to and from work. There are tens of thousands of such companies. Such vehicles would normally be classed as cars and it is not the aim of the clause to change that in any way.
The provision removes the tax charge where a works bus is used to transport employees between home and work; it is part of our green transport package. However, in order to avoid potential abuse, the bus in question needs to be clearly distinguishable from a car, so the minimum seating requirement needs to be large enough to act as a deterrent against using a larger vehicle to attract a tax break. A fine balance has to be struck between avoiding a perverse incentive on the one hand, and, on the other, meeting the aims of the many employers who genuinely want to provide a bus service that will get a significant number of employees out of their own cars and on to buses.
Since the Committee stage, I have considered whether the 17-seat requirement could be reduced for works buses, and whether we could dispense with any seating capacity requirement for the public bus service exemption. As hon. Members will see from other amendments, we have indeed entirely removed the seating requirement for the public bus exemption. For the works bus, we felt able to come down significantly—by almost one third—to a minimum seating capacity of 12, which, I think, was the figure proposed in Committee by the hon. Member for Torridge and West Devon (Mr. Burnett).
That does not reduce the minimum quite as far as was proposed in some of the amendments tabled in Committee. However, there would be a real danger of opening the way to avoidance, if a figure lower than 12 were adopted. None the less, the amendment, taken with the other relaxations that we have introduced, will go a very long way towards meeting the points that were made in Committee, and in representations to us.
Amendments Nos. 5 and 6 deal with concerns expressed in Committee that the wording of the conditions about qualifying journeys in a works bus was too restrictive, and that some specific relaxation should also be introduced to enable children of employees to travel on the works bus without prejudicing the exemption. As I explained in Committee, the original wording would already have permitted some non-qualifying journeys, but concern was expressed in Committee about the use of the word "only" in relation to the qualifying conditions. The amendments retain the main thrust of the exemption—to exempt employees on their home-to-work journey from any tax on that benefit—but we have now expressed that, in amendment No. 5, in a main-use test for home-to-work journeys. We have removed the references to "substantial compliance" and to "only" about which some hon.


Members were concerned. I hope that makes it clear that, provided the main-use test is met, a certain amount of other use of the service can take place without the exemption being lost—that is the key point.
As regards children, within the main-use test provided by amendment No. 5, amendment No. 6 includes a specific reference to allowing the children of employees to use the bus. However, that does not involve any restriction of the opportunity for a limited amount of other non-home-to-work travel by individuals without the exemption being lost. Together, the amendments introduce a simpler and, I hope, more user-friendly concept of main use.
As I have pointed out, amendments Nos. 7, 8, 9 and 12 remove any seating requirement for the public transport service subsidy, because the avoidance risk in respect of husband and wife directors, to which I referred, does not really apply to a public passenger transport service. We have decided that we can dispense with any minimum seating test.
Amendment No. 10 responds to an issue that was brought to my attention in Committee by my hon. Friend the Member for Wentworth (Mr. Healey). He wanted to cater for situations in which, for example, bodies with particular experience in the transport sector, such as passenger transport executives, provide an intermediary service—brokering the necessary payment and transport arrangements with transport companies—on behalf of one or more employers. The amendment introduces a relaxation to the road service bus subsidy exemption, by removing the requirement that the subsidy, or other support, for the bus service must be provided directly to the operator of the service.
Finally, amendment No. 11 arises from the consideration that I promised to give to an amendment proposed in Committee by the right hon. Member for Fylde (Mr. Jack). The issue is whether the condition in clause 45—that the service must be substantially used for commuting journeys only—is necessary in relation to the exemption for employer subsidies to public transport services.
As I said in my reply to the Committee, under the transport subsidy exemption, employees have to pay the same fare as other passengers. In those circumstances, there is no need to be concerned about the number of occasions, in addition to the ordinary commuting journey, on which the employee otherwise uses the service. In reconsidering the matter, we see no further risk in making the change proposed by the right hon. Gentleman. I am happy to introduce an amendment to remove entirely the requirement for employees to use the public bus service substantially for home-to-work journeys.
The amendments simplify and improve the package of measures announced by my right hon. Friend the Chancellor in the Budget to give significant support to the growing number of employers who are introducing green transport schemes and, hence, providing an incentive to other employers to follow that example. I commend the amendments to the House.

Mr. Flight: After I was privileged to be elected as the representative of the citizens of Arundel and South Downs, the first business that I visited was a mushroom

farm employing about 500 people. The business was in a rural area and many of the employees did shift work. They went through various business issues with me, and two major political points arose. The first was the subsidisation by the EU of mushroom farmers in Ireland, but the second was the advice from the Revenue that the bus service provided for the workers would be taxed as a benefit in kind to the recipients. In view of the hassle of assessing what the benefit in kind might be, it was felt that the company should stop providing the service.
I wrote to the Treasury once or twice, before the present Economic Secretary was appointed. The responses that I received were not particularly encouraging, but the point of my preamble is to explain why I am delighted that the Government have introduced these measures. They are obviously common sense, if we want to cut down the use of cars in rural areas. The benefit in kind aspect is minimal, while the benefit to the rest of the community is substantial.
My main comment is on amendment No. 6. It struck me that there could be occasional use by children, but not by spouses. I understand the explanation given by the Economic Secretary as to the purpose of that limitation, but it struck me that that might not be adhered to in practice. It might present a problem, if one spouse and the children—for whatever reason—needed a lift to the workplace of the other spouse.
Secondly, such works buses could occasionally provide valuable help in rural communities, by giving a lift to old age pensioners; I am sure that, if there were space on the bus, such people could board it. I trust that such practical anomalies would not undermine the tax advantages of the whole scheme.

Mr. Nicholas Winterton: My hon. Friend obviously knows his constituency remarkably well. Out of interest—I do not seek to score political points—and given the problems that the company might encounter, or the hassle to which he refers, are there other public service buses to carry out the service?

Mr. Flight: I thank my hon. Friend for his question. The bus services are not adequate; it would be a nightmare for many of those individuals to get to work. There are substantial time gaps in the existing services, and many of the staff would have to stop working for the company. Others would have to travel by car, scooter or other forms of transport. The example that I have given is a high-employment rural industry that is currently prospering and it is a wholly suitable beneficiary of the Government's proposals. There must be many other such cases, especially in rural areas, where labour-intensive employment is sought.
The rest of the amendments strike me as being fairly sensible, if occasionally slightly over-defined. We understand the underlying principle of avoiding exploitation of the concession by family companies, but if a 17-seat minimum is too high for the purposes of defining a bus, 12 seats is well in excess of the number found in a car. However, if a company were to use some form of dormobile, it is debatable whether 12 seats really means 12 seats. Amendment No. 12 appears to remove the definition of how the number of seats is counted, and I assume that that is done to permit a degree of practical flexibility in the matter.
However, the essential point is that the amendments are welcome. It is good news that the Government have modified their original proposals to make them as practical and user friendly as possible. I trust that the general enforcement guidelines issued to the Revenue will reflect common sense.

Mr. John Healey: I welcome the amendments, which make a good clause much better. I particularly welcome amendment No. 10, and I am grateful to my hon. Friend the Economic Secretary for responding so positively to my representations in Committee. Amendment No. 10 removes the restriction whereby tax relief is payable only on subsidies from an employer paid directly to a bus operator for services provided exclusively to employees of that company. Ensuring that that tax exemption may also apply to subsidies paid via a passenger transport authority will strengthen the hand of PTAs to broker new bus services that serve more than one employer.
That is especially relevant to an area such as Rotherham, which I represent. Over two decades, we witnessed the destruction of the coal industry and severe damage done to our engineering, manufacturing and steel base by two deep recessions. The borough contains areas such as the lower Don valley and the Dearne valley which are now regeneration areas; they are strong on inward investment, but weak on public transport. Earlier this month, I met the recruitment manager of Ventura, which is a call centre that is currently investing in the Dearne valley and seeking to recruit about 4,000 employees during the next two years. She told me that the company had identified 200 unemployed people in the Dearne valley to whom it could not offer jobs because they did not have a car and so could not get to work. Good transport has a role to play in job regeneration.
The clause, as amended, will allow PTAs and employers to play their part in achieving the aim that the Government have set for the clause, which is the encouragement of greener transport means.

Dr. Cable: I should like to express my support for the measure and, in the process, thank the Economic Secretary for her response to representations on the previous clause. I was so gobsmacked that the Government had listened carefully to the criticisms, talked to the practitioners and responded sympathetically that I did not rise as quickly and as graciously as I should have done to express my appreciation. That was a positive development.
The season of good will appears to be upon us—we are being showered with presents and concessions. The current group of amendments is especially welcome. My hon. Friend the Member for Torridge and West Devon (Mr. Burnett) asked the Government to examine the definition of a bus. He asked Ministers to consider size—specifically, 12 seats—as a means of introducing greater flexibility; and to consider intermediate means of transport that fall between the full-sized bus and the car. I am glad that the Treasury has considered those matters and has acted positively. I unreservedly welcome this positive development.

Mr. John Horam: I, too, welcome the amendments and I shall join my hon. Friend the Member for Arundel and South Downs (Mr. Flight) in making favourable comments about them.
The measure before us is part of the Treasury's transformation into a much greener Department than it has hitherto been. I recall the Minister in Committee making a good case for actions taken in the Budget, and I recognise the amendment as part of that effort. Anything that encourages green transport plans is wholly welcome. As the hon. Member for Wentworth (Mr. Healey) said, they help in his part of the world, and they certainly help in rural areas. Jobs can depend on transport planning.
May I enter one caveat—or one encouragement, to put it more mildly? The Minister is not only the Economic Secretary but the Green Minister in the Treasury, so she may have noticed that the Environmental Audit Committee, of which I am Chairman, published a report this week in which we pointed out that, Department by Department, the Government were not setting an especially good example in developing Green transport plans. When the Economic Secretary attends the next Green Ministers' meeting, will she make a favourable report on the reception given to the amendments by the House of Commons in this debate, and encourage Green Ministers in other Departments to follow her excellent example?

Amendment agreed to.

Amendments made: No. 4, in page 24, leave out lines 24 and 25 and insert—
bus' means a road passenger vehicle with a seating capacity of 12 or more; and'.

No. 5, in page 24, line 33, leave out from first 'the' to end of line 34 and insert 'following conditions—

(a) the service must be available generally to employees of the employer (or each employer) concerned;
(b) the main use of the service must be for qualifying journeys by those employees.'.

No. 6, in page 24, line 36, leave out from 'the' to end of line 40 and insert
'condition that the service must be used only by the employees for whom it is provided or their children.
For this purpose 'children' includes stepchildren and illegitimate children but does not include children aged 18 or over.'.

No. 7, in page 25, line 14, leave out 'bus' and insert 'road'.

No. 8, in page 25, line 18, leave out 'bus' and insert 'road'.

No. 9, in page 25, line 20, leave out

'with a seating capacity of 17 or more'.

No. 10, in page 25, leave out lines 29 and 30.

No. 11, in page 25, leave out lines 37 to 39.

No. 12, in page 25, line 46, leave out from beginning to end of line 3 on page 26.—[Mr. Clelland.]

Clause 47

CYCLES AND CYCLIST'S SAFETY EQUIPMENT

Ms Hewitt: I beg to move amendment No. 13, in page 27, line 1, leave out from 'to' to end of line 3 and insert
'the condition that the employee must use the cycle or safety equipment mainly for qualifying journeys.'.
While the House is in a happy mood of consensus on environmental objectives—which was far less obvious in our earlier debate on the fuel duty escalator—let us turn to


amendment No. 13, which again simplifies the provisions relating to tax relief for cycling, which is another part of our green transport package.
The amendment replaces the requirement that the tax exemption is available only if there is
substantial compliance with the condition that the employee must use the cycle or safety equipment only for qualifying journeys
with the condition that the equipment is used "mainly" for qualifying—that is, home-to-work—journeys. In other words, it does for bicycles what the previous group of amendments did for works buses. As I explained in Committee, there is no intention to withdraw the relief if the employee also uses the bike for private or leisure use. Provided that the bike is mainly used for the commuting journey, the tax exemption will remain. Of course, employers will not be expected to check up on their employees' other cycling journeys.
In Committee, concern was expressed—notably by the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale), who has since been translated into the Trappist position of Parliamentary Private Secretary to the Leader of the Opposition—about the apparently restrictive nature of the "substantial compliance … only" wording. Similar concern was expressed about the works bus exemption in clause 45. In the light of our amendments to clause 45, we thought that it would be helpful and welcome if we made a similar change to clause 47, to replace the "substantial compliance … only" formulation with a main-use test. That is what amendment No. 13 would achieve.
On the subject of green transport plans in general, I emphasise that Her Majesty's Treasury does, indeed, have a green transport plan. It encourages employees to use bikes and buses to get to work, and the proof of its success is demonstrated by the number of bike parks used within the Treasury building.
I commend the amendment to the House, in the certainty that it, too, will meet with an unreserved welcome.

7 pm

Mr. Flight: I support the amendment and, indeed, clause 47. As has been pointed out, the amendment applies similar common sense and fairness to cycling as the previous amendments did to bus transport. I cannot resist commenting that my hon. Friend the Member for West Dorset (Mr. Letwin) could not have spoken on this amendment without declaring an interest as a regular cyclist.

Mr. Oliver Heald: Does my hon. Friend think that it is rather shocking that, on such an important green issue, not a single Liberal Democrat is present?

Mr. Flight: They have clearly got on their bikes.
Interestingly, this measure will be used mostly in towns, whereas those that apply to buses will be most used in rural areas. It will be interesting to note to what extent the provision encourages bicycle transport in towns, because it amounts to a considerable tax perk. Companies will be able—as a result of the amendment, without too many strings attached—to give people

bicycles on which to travel to work and to use privately. That may lead to a substantial increase in cycle transport in cities.
Not having looked up the definition of a cycle, I wonder whether the measure will be wholly limited to pedal-driven vehicles, or whether it will cover any degree of petrol usage, as might pertain to the French velocette. I suspect that the former will be the case. We support the amendment and the clause, and are grateful to the Government for introducing it.

Mr. Healey: I, too, welcome the amendment. It improves a clause that is already innovative and an important departure from the past. The amendment loosens and improves the definition for tax-exemption purposes of what counts as bicycle use. My hon. Friend the Economic Secretary will be aware that the all-party cycling group, which is so ably chaired by my hon. Friend the Member for Exeter (Mr. Bradshaw), has pressed this point. I believe that it will very much welcome the amendment, which represents a more realistic reflection of the way in which people use bicycles, and will do much to encourage more people to take advantage of the tax break.
I spent 10 years working in London without ever using the tube. I went everywhere on an old, sit-up-and-beg, single-speed boneshaker with rod brakes, which was worth a tenner, and would therefore not have benefited from the tax relief on capital cost under the clause. I used that bicycle for many non-standard work journeys—from C to D to E to F throughout central London—rather than just for the A to B, home-to-work journey every day. Will such use be covered by the provision as amended?
I shall leave my hon. Friend the Economic Secretary with a point made by my hon. Friend the Member for Wimbledon (Mr. Casale) in Committee. If the measure is to have the intended impact, people must know about it. I urge my hon. Friend the Economic Secretary and her colleagues in government to give serious thought to promoting this important and innovative tax change.

Mr. Nicholas Winterton: I rise not as a dissenting voice in the harmony across the Chamber, but merely to solicit some information.
My hon. Friend the Member for Arundel and South Downs (Mr. Flight) was, as ever, gracious in the way in which he responded to the Economic Secretary, but he did not ask the question which I thought he was about to ask. I am aware that some pedal bicycles are fitted with a small auxiliary petrol engine, which can be incorporated into the pedal power of the cycle when an adverse gradient is encountered. I do not know whether such a mechanism automatically switches on or whether the rider must activate it.

Mr. Healey: rose—

Mr. Winterton: I am very happy to give way to the hon. Gentleman, who knows far more about these things than I.

Mr. Healey: Perhaps I can help the hon. Gentleman. He is referring to what in France is called the velosolex, to which the hon. Member for Arundel and South Downs (Mr. Flight) referred. It is activated with a lever and a clip. When one wants to lower the engine on to the wheel, one does so manually.

Mr. Winterton: It is at times like this that the House is at its most informative and helpful. I thought that my


hon. Friend the Member for Arundel and South Downs, whose knowledge on matters financial I respect, was about to ask whether such a pedal cycle would be included under the amendment. I hope that the Economic Secretary is listening; as ever in this House, I am trying to be helpful. Is the hon. Lady listening?

Ms Hewitt: Yes.

Mr. Winterton: Can the hon. Lady give me an answer to the question whether such cycles will be covered under the amendment which she so articulately and courteously moved? I see that those in the Box have quickly provided the answer—at least I hope they have.

Ms Hewitt: I must confess that I had not anticipated a debate about the meaning of the word bicycle, but clearly I should have done so. Perhaps it would assist if I drew attention to section 192 of the Road Traffic Act 1988, in which a cycle is defined as
a bicycle, a tricycle, or a cycle having four or more wheels, not being in any case a motor vehicle".
Therefore, I must disappoint the hon. Member for Arundel and South Downs (Mr. Flight) on the issue of velocettes or whatever. A bicycle that is powered by a motor would not qualify under the definition in the 1988 Act. Should the single market in power-driven bicycles take off, this is no doubt a matter to which we will return in a future Finance Bill debate.
My hon. Friend the Member for Wentworth (Mr. Healey) raised the question of non-standard journeys. Perhaps I can reassure him that, so long as the journey or any combination or element of it is related to work, the benefit from the cycle will not be taxable and the exemption will indeed apply. My hon. Friend also rightly raised the issue of publicising the tax exemptions that we are giving to green transport plans. We shall certainly be working with green organisations and cycling bodies particularly, as well as with employers' and employees' organisations, to ensure that people receive full information and are encouraged to take advantage of the exemptions.
The hon. Member for Arundel and South Downs referred in our earlier debates to the flourishing mushroom factory in his constituency. Perhaps I may be forgiven for saying that we hope that as a result of this package, green transport plans will also mushroom.

Amendment agreed to.

Clause 61

RELEVANT DISCOUNTED SECURITIES

The Financial Secretary to the Treasury (Mrs. Barbara Roche): I beg to move amendment No. 15, in page 35, line 27, leave out 'sub-paragraph (2)' and insert
'the following provisions of this paragraph'.

Mr. Deputy Speaker: With this, it will be convenient to discuss Government amendments Nos. 16 to 24.

Mrs. Roche: Clause 61 is designed to prevent avoidance of tax through an artificial scheme that exploits a feature of the definition of a discounted security. The effect is that a discount on a security which should be taxed as income over the lifetime of the security is charged only as capital gains tax and only when the security is disposed of or redeemed. The clause changes the definition of a discounted security so that it will no longer be possible to use that device.
The Government received a number of representations expressing concern that the clause went too far and would catch securities for which any discount that arises is small in absolute terms and obtainable only in the case of an event that is outside the control of the parties to the security. We listened carefully to the industry and examined the representations. As I said in Committee, we recognise that clause 61 might catch some securities where it would not be appropriate to do so.
We therefore published, during the Bill's passage through the House, draft amendments for consultation, and we have received comments from practitioners. The amendments before the House are slightly different from those published in draft form and take into account our considerations following the representations that we received.
The amendments would target the clause more closely on the objectionable transactions. They deal with the concerns expressed about the current version of the clause, without reopening the possibility of the avoidance at which the clause is aimed. I commend the amendments to the House.

Mr. Flight: The amendment, which we welcome, is yet another example of the result of over-zealous but somewhat sloppy initial attempts to introduce tax avoidance measures. The original proposals aimed to close a loophole through which bonds had been issued which offered a redemption premium in place of interest payments, and which had previously escaped the relevant discount securities regime. However, the proposals went much further and would trigger what is known as the Spens clause.
I should declare an interest at this point. I have some knowledge of bonds because I ran an investment management business for 25 years. There are unit trusts holding some £12 billion of bonds which, under the original proposals, could have found that their capital gains were assessed under income tax rules, and that would have affected hundreds of thousands of small investors.
As the Financial Secretary pointed out, the amendments serve—as was the original intent—to exempt from the anti-avoidance measure the Spens clause arrangements where redemption premiums can be paid at the issuer's option, in circumstances in which the owner can have no influence over that, except in cases of connected companies.
Various learned tax lawyers and the financial services industry generally take the view that the amendments reflect the Government's original intention. We therefore welcome them. However, although it can be difficult initially to focus anti-avoidance measures so that they will not cause injustices way beyond their intended effects, we should like to think that in future there will be a greater effort to get such measures right first time.

Mr. St. Aubyn: I thank Ministers on the Treasury Bench for finally getting their act together on this complicated issue. Why are they prepared to go to such lengths to make sure that these anti-avoidance provisions are sufficiently finely honed to deal with the mischief about which the Government were originally concerned, when last night, in the case of the sale of trust interests for capital gains tax purposes, they introduced a very crude anti-avoidance measure? It was so ill-thought-out—

Mr. Deputy Speaker: Order. I hope that the hon. Gentleman does not intend to dwell on what happened last night—we have moved on.

Mr. St. Aubyn: No, I do not mean to do so, Mr. Deputy Speaker. However, we need to know why the Government are now making such an effort while in that case they were prepared to breach the terms of their own code for fiscal stability by not adhering to the cardinal principle of tax neutrality.

Mrs. Roche: It always pains me considerably to break the mood of consensus and all-party support, but I must do so. As the hon. Member for Arundel and South Downs (Mr. Flight) knows, because this is an anti-avoidance measure and substantial amounts of taxpayers' money are at stake, it would not have been appropriate to issue draft clauses for consultation before the measure came into effect. However, because this Government listen and develop our policies properly, the Finance Bill process allowed us to consult on the details of the measures and to make improvements.
In the gentlest way possible, I say to the hon. Gentleman and the hon. Member for Guildford (Mr. St. Aubyn) that the amendments and the clause complete yet more unfinished business left to us by the previous Conservative Administration. They will know and appreciate that we have had to deal with the deficiency of definition in the Finance Act 1996.

Mr. St. Aubyn: Will the hon. Lady give way?

Mrs. Roche: No. I say to the hon. Gentleman exactly what I said to him in Committee: in 1996, 200 amendments on this matter were tabled two days before the debate in the House, and the Conservative Government had to vote down a clause. I have great pleasure in commending the amendments to the House.

Amendment agreed to.

Amendments made: No. 16, in page 35, line 32, leave out 'that is capable of and insert
'of which there may be a'.

No. 17, in page 35, leave out lines 37 to 42 and insert—

'(1A) The occasions that are to be taken into account for the purpose of determining whether a security is a relevant discounted security by virtue of sub-paragraph (1)(b) above shall not include any of the following occasions on which it may be redeemed, that is to say—

(a) any occasion not falling within sub-paragraph (1C) below on which there may be a redemption otherwise than at the option of the person who holds the security;

(b) in a case where a redemption may occur as a result of the exercise of an option that is exercisable—

(i) only on the occurrence of an event adversely affecting the holder, or
(ii) only on the occurrence of a default by any person,

any occasion on which that option is unlikely (judged as at the time of the security's issue) to be exercisable;

but nothing in this sub-paragraph shall require an occasion on which a security may be redeemed to be disregarded by reason only that it is or may be an occasion that coincides with an occasion mentioned in this sub-paragraph.

(1B) In sub-paragraph (1A) above 'event adversely affecting the holder', in relation to a security, means an event which (judged as at the time of the security's issue) is such that, if it occurred and there were no provision for redemption, the interests of the person holding the security at the time of the event would be likely to be adversely affected.

(1C) An occasion on which there may be a redemption of a security falls within this sub-paragraph if—

(a) the security is a security issued to a person connected with the issuer; or
(b) the obtaining of a tax advantage by any person is the main benefit, or one of the main benefits, that might have been expected to accrue from the provision in accordance with which it may be redeemed on that occasion.

(1D) In sub-paragraph (1C) above 'tax advantage' has the meaning given by section 709(1) of the Taxes Act 1988.

(1E) Subject to sub-paragraph (1F) below, where a security which is not a relevant discounted security but which would have been such a security if it had been issued to a person connected with the issuer—

(a) is acquired by a person who is so connected, or
(b) is held by a person who becomes so connected,

this Schedule shall have effect, in relation to times falling at or after the time of the acquisition or, as the case may be, the time when that person became so connected, as if the security were a relevant discounted security.

(1F) Where a security which—

(a) is a relevant discounted security, but
(b) would not be such a security but for sub-paragraph (1C)(a) or (1E) above,

is acquired by a person who is not connected with the issuer, this Schedule shall have effect, in relation to that person, as if the security ceased to be a relevant discounted security at the time of the acquisition.".'.

No. 18, in page 35, line 42, at end insert—

'() After sub-paragraph (2) of that paragraph there shall be inserted the following sub-paragraphs—

"(2A) Nothing in sub-paragraph (2)(c) above shall prevent a security that would have been a relevant discounted security if it had been issued to a person connected with the issuer from being treated as a relevant discounted security by virtue of sub-paragraph (1E) above.

(2B) Nothing in sub-paragraph (2)(f) above shall prevent a security from being treated as a relevant discounted security by virtue of sub-paragraph (1C)(a) or (1E) above.".'.

No. 19, in page 35, line 43, at end insert—

'(2A) After sub-paragraph (6) of that paragraph there shall be inserted the following sub-paragraphs—

"(7) Section 839 of the Taxes Act 1988 (connected persons) applies for the purposes of this paragraph.

(8) In determining for the purposes of sub-paragraph (1C), (1E), (IF) or (2A) above whether a person is or becomes connected with the issuer, no account shall be taken of—

(a) the security mentioned in that sub-paragraph; or
(b) any security issued under the same prospectus as that security."

(2B) In paragraph 10 of that Schedule (issue of securities in separate tranches), after sub-paragraph (3) there shall be inserted the following sub-paragraph—

"(4) For the purpose of determining whether a security held by a person who is not connected with the issuer is a relevant discounted security by virtue of this paragraph, a security which—

(a) is a relevant discounted security, but
(b) would not be such a security but for paragraph 3(1C)(a) or (1E) above,

shall be assumed not to be a security falling within sub-paragraph (1)(b) above."

(2C) In paragraph 13 of that Schedule (excluded indexed securities), after sub-paragraph (8) there shall be inserted the following sub-paragraph—
(9) In this paragraph references to redemption, in relation to a security, do not include references to redemption of the security on any such occasion as, by reason of subparagraph (1A) of paragraph 3 above, is not to be taken into account for the purpose of determining whether the security is a relevant discounted security by virtue of sub-paragraph (1)(b) of that paragraph.

(2D) In section 92 of that Act, after subsection (6) there shall be inserted the following subsections—
(7) Where an asset representing a creditor relationship of a company—

(a) ceases at any time to be an asset to which this section applies, but
(b) does not cease at that time to represent a creditor relationship of that company,

the company shall be deemed for the purposes of the Taxation of Chargeable Gains Act 1992 and this Chapter to have disposed of the asset immediately before that time for the relevant consideration, and to have re-acquired it immediately after that time for the relevant consideration.

(8) Any deemed disposal and re-acquisition under subsection (7) above shall be treated for the purposes of that Act of 1992 as a transaction in the case of which—

(a) sections 127 to 130 of that Act would apply, apart from the provisions of section 116 of that Act, by virtue of any provision of Chapter II of Part IV of that Act;
(b) the asset in question represents both the original shares and the new holding for the purposes of those sections;
(c) the market value of the asset at the time of the transaction is an amount equal to the relevant consideration.

(9) Subject to subsection (10) below, in subsections (7) and (8) above 'the relevant consideration', in relation to an asset, means the amount that would have been taken, in accordance with the relevant accounting method, to be the value of the asset at the time of its deemed disposal if that method had been applied to the asset for tax purposes at all times until then.

(10) Subsection (5) above shall not apply in the case of a deemed disposal and re-acquisition under subsection (7) above; but the amount of the relevant consideration in such a case shall be treated for the purposes of the Taxation of Chargeable Gains Act 1992 as reduced by so much (if any) of the amount mentioned in subsection (9) above as is referable to interest which—

(a) is not paid or payable to the company before the time of the deemed disposal; but

(b) is interest falling to be brought into account under subsections (2) and (3) above as having accrued before that time.

(11) In subsection (9) above 'the relevant accounting method', in relation to an asset representing a creditor relationship of a company, means the accounting method which, for the accounting period of that company in which the deemed re-acquisition takes place, is used as respects that asset and the part of that accounting period beginning with the deemed re-acquisition.".'.

No. 20, in page 35, line 44, leave out 'and (2)' and insert 'to (2D)'.

No. 21, in page 36, line 3, leave out 'and (2)' and insert 'to (2D)'.

No. 22, in page 36, line 12, leave out 'and (2)' and insert 'to (2D)'.

No. 23, in page 36, line 20, leave out 'and (2)' and insert 'to (2D)'.

No. 24, in page 36, line 25, leave out 'and (2)' and insert 'to (2D)'.—[Mr. Hanson.]

Clause 122

ECONOMIC AND MONETARY UNION: TAXES AND DUTIES

Mr. Francis Maude: I beg to move amendment No. 31, in page 90, line 6, after '122.', insert '(1)'.

Mr. Deputy Speaker: With this, it will be convenient to discuss amendment No. 32, in page 90, line 10, at end insert—
'(2) The said Commissioners shall make a report to the Chancellor of the Exchequer not later than 31st December 1999 on the exercise of their functions and on the amount and timing of the expenditure incurred in respect of subsection (1), and such report shall be laid before the Commons House of Parliament within a period of one calendar month.
(3) The Commissioners shall make further reports at intervals of six months, which shall similarly be submitted to the Chancellor of the Exchequer and laid before the Commons House of Parliament.'.

Mr. Maude: I am grateful to the Financial Secretary, who is now departing the Chamber, for breaking our spirit of consensus, because that saves me the effort of doing so in this debate. That spirit could not last for ever.
We move the amendments because we regard the clause as profoundly unsatisfactory. The principle that we seek to serve through the amendments is a clear one. It is to ensure proper accountability by the Government in all of their spending. Nowhere is that need clearer than where the Government have pledged to spend an unspecified quantity of taxpayers' money in pursuit of British membership of the single currency, or the euro. That is the proposal that is contained within clause 122. It empowers the Commissioners of the Revenue and of Customs and Excise to spend money to prepare systems in advance of any political decision by the House or apparently even by the Government, let alone by the people, to join the euro and to scrap the pound. Systems can be prepared well before there is any question of there being a referendum, when people will have the choice whether they want to scrap the pound to join the euro.
When there is uncontroversial legislation, Departments will often spend some money in advance of a formal decision being taken by the House. However, there is no


comparison between that traditional arrangement and the device that is being proposed in clause 122. Quite simply, the clause allows any amount of public money to be spent in advance of a decision following a national referendum, let alone of Britain actually joining the single currency.

Mr. Healey: How much would the right hon. Gentleman regard it as acceptable for the Inland Revenue to spend before a national referendum?

Mr. Maude: Questions about how much it is acceptable to spend should not be addressed to me. The Opposition have repeatedly asked what sums of taxpayers' money the clause allows the Government to spend. It is a blank cheque because no amount is specified. No estimate has been put before the House. The hon. Gentleman would do better to intervene when the Economic Secretary rises to reply, to ask her how much taxpayers' money she is proposing to shell out on this project without the people having had any chance to adjudicate on whether they want it to be implemented.
As the Government's turmoil over the single currency in the past month shows, the result of any referendum is no foregone conclusion, although that is what the clause is designed to try to achieve. The Government's natural inclinations show through in a measure that is oblivious to public opinion and wasteful of public money and that cocks a snook at democracy. I suppose that it is the natural solution for a Government who hope that the state can steamroller its way through public opposition into a project which few people in Britain seem to want. As the Prime Minister was forced to admit recently, hardly anyone in the country wants the project.
Above all, we see a pretty cowardly attempt to encourage businesses to do the dirty work of persuading people to want to scrap the pound. In what is no more than a charade now, the Government hide behind the five economic tests that they set out nearly two years ago and delay the day when they must make a public decision. The experts are more and more doubtful whether those tests mean anything. Mr. Buiter of the Bank of England's Monetary Policy Committee has said:
Except through a fluke, the UK will not join EMU at a time when the business cycles … are synchronised.
The requirement or condition that the British economy should be synchronised or converged cyclically with the continental economies is a fundamental condition for Britain joining the euro. Yet here we have a Government-appointed expert saying that that will not happen.
The Deputy Governor of the Bank of England, Mr. Mervyn King, recently commented:
You would probably need 200 to 300 years of data. You will never arrive at a point when you will be confident that the cycles have converged.
I am referring to experts who have been appointed by the Government. They make it obvious that any decision to join the single currency that is taken by the Government will not be based on certain economic conditions being fulfilled. On the most important one of all—cyclical convergence of the economies—the Government's experts at the Bank of England say that, effectively, that will never be met. That is the clearest sign that, if they

find themselves in the position to do this, the Government will fudge the conditions and move ahead anyway, which is what they want to do. That is why the Government are apparently willing to start spending money on preparations for Britain to join the euro. They wish to soften up the electorate now while maintaining that there is an economic tripwire in relation to the conditions. That tripwire does not exist.

Mr. Geraint Davies: Is the right hon. Gentleman aware that the National Audit Office audits the accounts on an annual basis? What is more, the appropriation accounts focus specifically on areas where there might be difficulties of change. Therefore, the amendment is completely redundant. Can the right hon. Gentleman give any particular reason why the expenditure that we are discussing, which will be transparently reported by the NAO in two sets of accounts, should be the subject of yet another layer of bureaucracy and extra costs for his own party political reasons?

Mr. Maude: If that is all the case, that is a powerful reason for the Government, if they are genuine in their desire to be open about these matters, to accept the amendments. They will then be incorporated in the Act, as it will then be, and the requirement will be there. However, the House is being asked, effectively, to sign a blank cheque. We think that that is wrong. If, as we contend, the process is being handled wrongly, a proper requirement for full auditing and for full transparency on a six-monthly basis would seem to be the least that the House, in pursuit of its historic task of controlling expenditure, should require the Government to agree to. I hope that the Economic Secretary has heard the point made by the hon. Member for Croydon, Central (Mr. Davies) and will be persuaded by him that there is no problem in accepting the amendments.

Mr. Davies: The amendments are about reporting, not limiting, the cost. I am contending that the cost is reported in any event. Therefore, the amendments are unnecessary and we should get on with business.

Mr. Maude: It would be advantageous in those circumstances for the amendment to be included in the Act so that there is an additional form of scrutiny. There is no way otherwise of exercising any control over the amount that the Government spend. The hon. Gentleman may be happy to tell his constituents that, in his great role as a Member of this place, exercising his historic role of controlling the Government and controlling public expenditure, he sat on his hands and thought that it was fine to write a blank cheque for the Government to spend. He may think that, but we do not.

Mr. Davies: Will the right hon. Gentleman give way?

Mr. Maude: No. The hon. Gentleman has made two silly points already. He may want the opportunity to make a fool of himself again, but the House will wish to proceed.
There is every sign that the Government are happy to pick taxpayers' pockets to fund a measure that taxpayers patently do not support. There is no sign of Ministers being willing to commit themselves publicly either to the single currency or to an early referendum. I suppose that


we should not expect an answer from the Prime Minister. He is rather like a first world war general. He is happy to push his colleagues over the top into the line of fire but is pretty reluctant to get tangled up in the barbed wire himself. General Blair is comfortably ensconced in his chateau ordering his faithful troops to clamber over the barbed wire when he blows the whistle. Not a peep from him, be it noted, until it comes to trying to trumpet and spin his new sceptical image on the single currency. Just the other day, he said that it was "daft" to consider entry straight away.
7.30 pm
Should we believe the Prime Minister's official spokesman, who said:
The Prime Minister does not feel there is any need to persuade people to make a decision that does not yet have to be made"?
That was quite instructive. Why, then, do the Government ask the House to approve expenditure—to sign a blank cheque—in relation to a decision that the Prime Minister says does not have to be made yet? It is extraordinary. How persuasive is the Government's case to allow the Revenue or the Customs to spend public money, if the decision for which they are preparing does not, according to the Prime Minister, have to be made yet?
Perhaps we should turn to the Leader of the House for elucidation. She said recently that the referendum might not be called even in the next Parliament. Is that the official position? It rather looks as though those may turn out to be her famous last words. The confusion might be laughable, if those were not the people supposedly running the country.
A week or so ago, the Secretary of State for Trade and Industry said about the organisation Britain in Europe, which is campaigning for Britain to join the single currency, that
because they"—
Britain in Europe—
have changed their position the Prime Minister can endorse their programme.
That was all part of the web of confusion that the Government were so sedulously spinning, but it turned out not to be the case.
The noble Lord Marshall, the chairman of Britain in Europe, said immediately afterwards:
We are not backing off the euro at all.
Clearly, the confusion runs far and wide.
Around the same time, the Prime Minister's famous official spokesman commented:
I don't understand the purpose of Britain in Europe. Is its campaign about Britain in Europe, or is it saying it's the start of the campaign to join the single currency? The two things are entirely different.
He spotted that, anyway. The two things are indeed entirely different. What is puzzling is why he is so confused about the purpose. All that he needs to do is open the pamphlet issued by Britain in Europe and he will see there, as large as life and spelled out in words of very few syllables, that Britain in Europe is the campaign to persuade the British public that they should agree to scrapping the pound and joining the euro.
All the confusion has not impressed people in Britain in Europe. They said:
We intend to press ahead with our campaign"—
for Britain to join the euro—
and we don't intend to hold back for anyone".

Mr. Leslie: I am grateful to the shadow Chancellor for giving way. He is trading statements, comments and quotes. What is his reaction to the comment
It would be completely crazy and contrary to the national interest to throw away our option to join the single currency",
especially as it was made by the hon. Member for Grantham and Stamford (Mr. Davies), his colleague on the Front Bench? What is his reaction to that?

Mr. Maude: A warm endorsement of our policy, which is not to throw away the option. The point that the hon. Member for Shipley (Mr. Leslie) has not got into his head is that the Prime Minister's and the Chancellor's policy of dragging Britain into the euro by stealth at the earliest opportunity is the policy that gives up the option. Once we have scrapped the pound and gone into the euro, we have no options at all, because the decision is irrevocable. As long as we stay out of the euro, we always have the option.
That is why our policy has always been the pragmatic policy. The dogmatic policy is the Chancellor's policy, which states that the Government are dogmatically committed in principle to Britain joining the euro. As soon as Britain joined the euro, if that were allowed to happen, the option would be gone. That is why the statement that the hon. Gentleman feels so clever for having quoted actually supports our policy.

Mr. Love: I thank the right hon. Gentleman for giving way. He mentioned the organisation Britain in Europe. Some of the best-known members of his own party are prominent in that organisation, and I note that they are not present in the Chamber this evening. Is not the Conservative party deeply split on the issue?

Mr. Deputy Speaker: Order. Perhaps we should return to the clause and the amendment before us.

Mr. Maude: If that is the best that the hon. Member for Edmonton (Mr. Love) can do, I suggest that he remains in a sedentary position.
Whichever of those apparently non-committal statements we prefer to believe—or none of them, in my case—the lack of leadership offered by the Government on the issue hardly makes a pressing case for the House to agree to the spending of money—the writing of blank cheques—that we are asked to agree tonight.
The national changeover plan—the handover plan—gives the game away, by showing that what we are being asked to do is not necessary. I refer the House to figure A in the changeover plan at page 18, which sets out a time line or critical path for Britain to scrap the pound and join the euro. It shows the various points: decision; referendum; UK joins; euro cash issued; and the end of the process, when the pound is finally scrapped.
There is a nice blue bar showing which process must start at which point. There is a bar marked "public sector", which I assume includes the Inland Revenue and


Customs and Excise. That blue bar does not start now. It does not even start at the point at which the decision is made. The bar starts when a positive decision is made in a referendum. Even if there were a rock-solid certainty that there would be a decision to join, which there patently is not, we do not need to contemplate the matter now. The Government's own document makes that clear.
It is not as though there is nothing before the point of decision. There is a nice blue bar showing that there must be legislation before the referendum. The banks would have to make preparations before the referendum, but there is nothing in the figure about the Inland Revenue and Customs and Excise. It is all there, in the public sector. According to the Government's own document, nothing needs to be done until there is a positive decision in a referendum.

Mr. Nigel Griffiths: I remember the right hon. Gentleman saying in 1997 that he would make it clear to his constituents that he would oppose any legislation to adopt the euro. Has he now changed his mind?

Mr. Maude: What I am doing today is opposing legislation to adopt the euro. I do not know how I can make it clearer than that. We think that the measure is wrong. We think that the Government should not be asking the House of Commons to sign blank cheques and to force the taxpayer to spend money. If there is not a decision to join the euro—the Prime Minister himself accepts that hardly anyone believes that we should—that money is wasted money.
We have still had no answers from the Government about how much money is involved. We have still had no answers about how many schools will not get their extensions, and how many wards will have to be closed down to pay for this utterly unproductive expenditure on which the Government are so keen.
When the Economic Secretary replies, I should be interested to hear her explain the fact that the graphic in the Government's document makes it clear that there is no case for the measure that the Government propose. That graphic seems to have escaped the attention of the spin doctors. It lets the cat out of the bag. It makes it clear that there is no basis for the measure.
Not surprisingly, given how distant the Government are trying to make the possibility of a referendum appear, the Prime Minister has been a bit woolly about how much money the Government would spend. In his statement on the national handover plan on 23 February, he referred to the Inland Revenue and the Customs, saying:
They may need to spend some money prior to a referendum to make their information technology systems euro-compatible".
He moved on to give us an idea of how much "some money" is, saying:
such expenditures … will amount to some tens of millions of pounds spread over a number of years.
Will the Economic Secretary tell us today whether the measure that we are being asked to agree to amounts to tens of millions of pounds? If so, how many tens of millions? She must have some idea.
I cannot believe that Treasury Ministers would ask the House of Commons for approval to spend money without having any idea of how much would be spent, but our

questions are met with a deafening silence. The Government are absolutely sure that agreeing to the measure is the right thing to do, but they cannot tell us how much that will cost. They have not quantified the benefits of Britain joining this effort, and they cannot tell us how much that will cost. Not a flicker of an effort has been made to cost the costs and quantify the benefits. How do they expect to persuade anyone that this is a good project for the country when the Government cannot even get to that point?

Mr. Leslie: Will the right hon. Gentleman give way?

Mr. St. Aubyn: rose—

Mr. Maude: I shall give way to my hon. Friend the Member for Guildford (Mr. St. Aubyn). [Interruption.] The hon. Member for Shipley made such a poor fist of his previous intervention, I am saving him from embarrassment.

Mr. St. Aubyn: Does my right hon. Friend agree that the Prime Minister's readiness to tell businesses and taxpayers to reach into their pockets to spend money preparing for the euro contrasts starkly with his refusal to spend any of his own time promoting the project?

Mr. Maude: That is an absolutely fair point. The Prime Minister is keen to get other people to make the running because, although he and the Chancellor are absolutely committed to the project, to dragging Britain into the euro and to scrapping the pound by stealth—no one should be under any illusions about that—he is reluctant to put his head above the parapet because he understands that hardly anyone wants the euro. He has admitted that himself.
The Prime Minister makes the large claim that, "It's only tens of millions of pounds. That does not matter, it's just a rounding error." He justifies it by saying:
The Government will be making active preparations for the euro, in the belief that it will be in this country's interests to join in the future should our economic tests be met.
We have already seen that those tests are bogus because the Government's own experts have accepted that the principal test will never be met. He went on:
Business should start to do the same."—[Official Report, 23 February 1999; Vol. 326, c. 181.]
He seems to have overlooked the rather important difference between his Government's lavish spending plans and the day-to-day fight that many businesses face to survive against increasing regulation and mounting stealth taxes, which his Government are imposing weekly.
The Prime Minister seems to forget that, while 100 per cent. of small businesses pay the rising taxes that fund those spending plans, only six out of every 100 small businesses said that the euro would affect them a great deal and 46 per cent. said that it would not affect them at all. The big difference is that, although businesses have to budget carefully to remain in business, the Government think that they can throw money at the political problem, because the Prime Minister does not have the courage to take a lead on an issue that he knows is unpopular. He is trying to buy his way out of that with taxpayers' money, which is a case of, "Do as I say, not as I do."
That cannot be right—not when the funds needed to prepare for economic and monetary union may outstrip the cost of dealing with the millennium bug by as much


as 5:1. Whereas the millennium is at least foreseeable, the Government seem to be doing their best to spin an opaque web of disinformation around their own position. Why should business spend money to prepare when they refuse to give a coherent lead? Why should the taxpayer and the small business man bankroll a Government who are so unwilling to give a forthright lead?
It has been estimated by Lloyds TSB that those preparations will amount to £2,000 for every small business in the land. For many, that money will not be an investment with any prospect of payback—46 per cent. of small businesses say that the euro would not have any impact on them at all because they are United Kingdom-based. After all, 83 per cent. of Britain's national output is not sold in the eurozone at all—it is sold either here in Britain or elsewhere in the world—but the costs of preparing will fall on 100 per cent. of British capacity.
7.45 pm
There is little sign from the plan that the Government understand the demands of business. It talks blithely of how small businesses may have to take on extra staff to help the elderly to meet the challenge of the changeover, but small businesses cannot afford to take on more staff—certainly not with the cost and complexity of employing people increasing so rapidly under this Government. That is one reason why businesses are small.
The document's open advocacy of EMU is unfeigned. Talking, supposedly dispassionately, about the engineering sector, it says that
50 per cent. of all engineering exports are to the EU. Historically, the sector has been vulnerable to fluctuations in the value of sterling.
What does that have to do with the changeover? The answer is nothing; it is just a party political broadcast on a supposed benefit of EMU. It is quite clear that, if the national changeover plan—which pretends to have foresight of which Nostradamus would have been proud—cannot avoid being political, we have every right to question the latest Government proposal to help to drag the United Kingdom into the single currency.

Mr. Leslie: Will the right hon. Gentleman give way?

Mr. Maude: No, I shall make some progress now.
It is time that the Government started to tell the truth about the real costs of joining the single currency. According to one survey, the real costs for businesses of changing are turning out to be 10 times higher than the European Commission predicted. That is surprising. We believe that it is absolutely right that the Government should account for their own spending and should come clean about what those costs will amount to and what the money will be spent on. It is also time that the Government came clean about some of the constitutional issues involved in the decision.

Mr. Geraint Davies: Will the right hon. Gentleman give way?

Mr. Maude: I shall give the hon. Gentleman another chance.

Mr. Davies: As I understand it, the right hon. Gentleman's position is to keep his options open and,

at some point in the future, he could conceivably put to the British people the question whether to join the single currency. Would it be wise to make some preparations for the contingency of joining or should we put the question to the British people with no hope of business and the public sector being prepared for the tremendous changes that we might see? Would he let the British public down in such a way or would he prepare?

Mr. Maude: The hon. Gentleman is clearly the sort of chap who starts building a house before he has even applied for planning permission. It is mad to start spending money on an eventuality that the Prime Minister himself admits people do not want to happen and which cannot happen unless most people agree in a referendum that it should. Even the Government admit that, so it is crazy to start wasting money, which is scarce. The public services and businesses need it to create new products, services, jobs and wealth, but the Government think that it is fine to spend in such a way.
If the hon. Member for Croydon, Central looks at the time lines set out in the document, he will see that there is a considerable period between a decision being made in a referendum and the United Kingdom joining.

Mr. Davies: Will the right hon. Gentleman give way?

Mr. Maude: No, because plenty of other hon. Members want to speak in the debate. I have given way a great many times and I want to make progress. The fact is—[Interruption.]

Mr. Deputy Speaker: Order. I cannot allow the hon. Member for Croydon, Central (Mr. Davies) to shout across the Chamber.

Mr. Maude: If the Government do not want to call a referendum to test public opinion, they should not be asking the House of Commons to agree to spend taxpayers' money, either on departmental preparations or on the changeover plan. Our proposal offers a simple precaution: the Commissioners of the Revenue and of the Customs should account for every penny that they spend to get ready for EMU every six months, as long as the position remains as it is. On such a controversial political issue, is it not right that taxpayers should have the right to know in detail how much of their money is being spent on the project—in arrears, at any rate? If the Government are not honest enough to set that out in advance—when they are asking for the money to be spent—we should know how much is being spent on this project, which most people do not want. Surely that is part and parcel of proper scrutiny in a parliamentary democracy.
In an age in which it is claimed that government have learned some lessons from business, it is surely right that the Government should set themselves some budgetary limits.
There is a good reason why the Government want to spend so much public money so far in advance of a referendum. They want to prepare to scrap the pound and drag Britain into the euro by stealth. They want to sap opposition to their plans through a vast state-sponsored spendathon, and to spend so much taxpayers' money that a headlong rush into EMU becomes the only plausible option. That is arbitrary government, not parliamentary


government. That is why we have opposed, and will continue to oppose, the national changeover plan as a ploy dressed up in the language of prudence.
We shall continue to press the Government to sign up to the Neill report, which is of direct relevance to these provisions. They have shown a remarkable reluctance to sign up to the recommendations of Lord Neill and his committee. We should remind the House of one of his principal conclusions. The committee said:
The Government of the day in future referendums should, as a Government, remain neutral, and should not distribute at public expense"—

Mr. Deputy Speaker: Order. The matters that the right hon. Gentleman is raising are wide of his amendment. He should get back to the amendment.

Mr. Maude: I shall move on to my final remarks.
There is a direct parallel with the Neill committee's recommendation. The Government are spending money without parliamentary authority to make the drive towards scrapping the pound inevitable. It is wrong for the Government to be involved in the campaign using taxpayers' money, as they have done. It is wrong from them, in this clause, to spend taxpayers' money, which will be utterly unproductive if the British people decide that they do not want to go into EMU.
The Government want the so-called national changeover plan to be a national handover plan. We oppose the sleight of hand that goads business into spending money on something on which the Government will not risk their popularity. Their leadership on the single currency is leadership from behind. Proper accountability is the responsibility of any democratic Parliament, especially the House of Commons.
The amendment guarantees proper scrutiny, and is in line with the conclusions of the Neill committee, on which the Government have promised they will act. I commend it to the House.

Dr. Cable: I am a little mystified about the purpose of the debate. We have been given a half-baked analysis of EMU—a few throwaway lines about the problems that it presents—and an equally half-baked analysis of the scrutiny process and the constitutional issues. We are not focusing on either subject properly. There is a genuine issue of constitutionality in relation to the preparations, and it should be dealt with openly and transparently.
When we debated this matter in Committee, the shadow Chief Secretary raised some technical points about the constitutional nature of expenditure commitments. As I am not a constitutional lawyer, I do not know whether he was right or wrong. The shadow Chancellor did not persist with those points. I do not know whether it was because they have been answered, but we need to focus on that aspect. We need a proper analysis of the constitutional position, and that is why I surprisingly supported the request of the hon. Member for Stone (Mr. Cash), among others, for a constitutional White Paper dealing with EMU in general and preparations in particular.
It is quite wrong for the Shadow Chancellor, to say that there is no mechanism for scrutinising this expenditure. As has already been said, the National Audit Office, the

Select Committee on the Treasury, European Standing Committees and the Chancellor of the Exchequer's committee on EMU preparation, on which I sit and which has been convened precisely for that matter, exist for that purpose. I hate to remind members of the Conservative Front Bench that they were invited to sit on that committee. They procrastinated for three months: they put forward a name and then withdrew it. That committee is now meeting, and it has been fruitful.

Mr. Maude: Our position has been misrepresented before. When that Committee was being set up, we ascertained that it would not be involved in preparations for Britain to scrap the pound and to join the euro, and would be concerned solely with preparations for Britain to deal with the euro from outside while retaining its own currency. We thought that function wholly appropriate, so we nominated someone for the committee. However, we do not want to be involved in a process that we think quite improper until the British people have decided that they want to join the single currency. That is the time at which preparations should be made. One does not wheel the wagon half way across the river before asking the passengers whether they want to get to the other side.

Dr. Cable: I do not understand what impropriety is being committed, because the euro preparations committee comprises not only people who, like me, believe that Britain should be a member of EMU, but some fairly severe Euro-sceptics from Northern Ireland, who do not feel at all uncomfortable about sitting on that committee. It provides a forum. I have asked the chairman of the committee to prepare documents and to obtain from the Treasury detailed information on this preparatory process so that we can review it critically and perform a scrutiny function. Members of the Conservative Front Bench, whatever their original reasons, are missing a perfect opportunity that Parliament has provided.
To get back to the nub of the point, the objection seems to be that the Government should not engage in contingency planning for something that has not yet been approved by the British people in a referendum. That is irrational. The public and private sectors, in their different ways, engage in contingency planning: often very expensively. The defence budget is a form of contingency planning against events that we hope will never happen but for which we must be prepared.
As I said in Committee, I know from my private sector experience that many companies in the energy and property sectors spend large amounts of money purchasing options on future investments that they may never make. That is good commercial practice. We are confronted with a decision that we all agree—whether we are for or anti—is probably the most important that this country must make, and it should be taken well and in the full knowledge of what is required.

Mr. Swayne: Is not that the thrust of these amendments? They would allow us to scrutinise what is done with full knowledge. The hon. Gentleman seems to suggest that that scrutiny function should be carried out solely by his small committee. It should be undertaken by the whole House, as the amendments require.

Dr. Cable: That small committee would be larger in significance and number if the hon. Gentleman and his


colleagues joined it. We could have many other scrutiny mechanisms. There is no justification for stopping sensible forward planning and contingency planning.
Other points, which were thrown into the debate off the cuff and not as part of a coherent theme, related to the economics of EMU. I was surprised that the Conservative spokesman quoted in defence the views of Professor Willem Buiter, whose articles I have read. Professor Buiter is an independent-minded member of the Monetary Policy Committee, and has gone out of his way to argue—as distinct from the Governor of the Bank of England—that Britain should be a member of EMU and, moreover, that it is likely to succeed. That is a different position from the one that the right hon. Member for Horsham (Mr. Maude) has taken, so it is an odd choice of witness.
The other point of substance that the right hon. Gentleman made, with which I partly agree, is that there must be a proper test of economic readiness to join. We all agree on that. I am not arguing for entry tomorrow. It must be on the right terms and conditions, the most important of which is the exchange rate, which is not one of the five tests at present. It is not correct to say that it is absolutely necessary to have complete cyclical convergence. There is no reason why that should be achieved. We should converge at the same low level of inflation, which is broadly what has happened, and our cycles should be broadly compatible, but the myth has been perpetuated that the British cycle is different from that of continental Europe. It has been since 1990, when German reunification created a divergence of our economies, but throughout much of the post-war period the British and German economies have moved in parallel, and there is no reason why that should not resume in a few years' time.
The purpose of the debate is not to discuss the pros and cons of EMU: I am happy to join in that debate at any other time. It is about parliamentary scrutiny. It is right that the Government should make prior preparations, and it is right that that should involve certain expenditure and should be scrutinised, and we have a mechanism for that.
I agree with the Conservative spokesman on one point. He is right to say that the private sector is being invited to take substantial risks. It is being invited to make preparations without being given the clarity that I would expect. It is unfortunate that we have not already had a referendum, although that is water under the bridge. I feel that the Government must be clearer and more forthright about where they are heading, about their commitment to join and about the timing. On that if on nothing else, I agree with the right hon. Gentleman.

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Sir Peter Lloyd: I strongly support the amendment. My right hon. Friend the Member for Horsham (Mr. Maude) put the case for it very well, especially in making the point that there is no real need to rush spending before the referendum. Figure A and the chart on page 35 of the changeover plan seem to endorse his view. Certainly, the amendment does not ask for very much; it simply asks for information, so that Parliament and the public can know how much the Inland Revenue and Customs and Excise are spending on preparation for our joining the single currency.
The single currency is a matter of growing public interest. In some it generates enthusiasm, as for an exciting new dawn; in others, it generates certain

conviction that it will bring us no good. In most, however, it probably generates puzzlement and apprehension, as it becomes plainer that it is they who, in due course, will have to pass judgment, and say yes or no to the question of our actually joining.
The Finance Bill would give the Government authority to spend whatever money they thought fit to prepare the Revenue and Customs and Excise for the possibility that the answer will be yes. Because there is apparently no ceiling to that expenditure, the Government should surely, at the very least, keep a running total of what they spend, and then let the country know at regular intervals how much they are spending and on what.
This is not to deny the desirability of the Government's laying plans for our possible entry into the euro. As it is for the people to decide the matter by way of referendum, however, the Government should so organise themselves that the costs of joining are made clear, and the work that must be done to give effect to a yes vote is thought through well beforehand. The facts concerned are part of the evidence of which the public should be in possession, so that they can weigh them before deciding that the money is needed to put into effect the decision that they make.
I am sure that it is right for the Departments involved, when upgrading their procedures, programmes and equipment in the normal way of good housekeeping, to make certain that the new procedures, programmes and equipment are sufficiently versatile to handle the euro as well as sterling, so that greater expense and unnecessary delay are avoided if the voters eventually decide that joining the single currency would be to the United Kingdom's advantage. I am also sure that the Government ought to make the necessary plans and investment across the public sector to accommodate and facilitate trade in euros, and its use in domestic transactions when companies or individuals choose to make and receive payments in euros. That should be done regardless of whether we join the single currency. If we do not eventually adopt the euro, we shall want to be able to use it whenever it suits us, our businesses, or overseas visitors doing business here.
This country has prospered as a result of its openness and flexibility, dealing happily in any and every currency in which its customers want to trade. My own view has always been that, when the public are finally asked for their verdict, they will say no to a single currency. It is beyond the scope of this debate for me to say why, so I will not; but it is germane for me to say that I am not as worried as some of my colleagues—including, perhaps, my right hon. Friend the shadow Chancellor—that Government expenditure, assuming our entry into a single currency, will give the public the idea that entry is inevitable, and so cause them to vote yes in the referendum when they would have preferred to vote no.
It may be that some members of the Government who are enthusiasts for the single currency do have such an idea. They may see the unrestricted freedom to spend as a wonderful way of carrying the public psychologically into euroland before they have voted to join. I believe that such thinking, if it exists, is erroneous. I am sure that the public would resent and resist any attempt by the Government to use their money to foreclose on a decision that they, the public, had expected to make in due course—freely, in the light of the experience of other EU countries that have already adopted the euro. I believe


that, if the Government really want to take us into the single currency, they will find it counterproductive to give the public the impression that their assent was taken for granted, or the impression that they—the Government—seek to engineer entry in advance by means of a series of faits accomplis, especially if they do that by spending money that would be wasted in the event of a no vote.
Such an action on the Government's part would be of dubious constitutional propriety. I will not expand on that, as the Bill would give the Government the legal right regardless of the proprieties, as my right hon. Friend said earlier. What I will say, however, in an effort to be helpful to the Economic Secretary—although my right hon. Friend may not thank me for revealing this—is that the Government will do themselves a disservice if they reject the amendment, and deny themselves the chance to show that they have nothing to hide and no ulterior motive, but merely wish to be open and frank with Parliament and the electors.
If the Government do reject the amendment, they will leave in the public mind a suspicion that, at the very least, they want to retain the option of not being open and frank. They will also leave my right hon. Friend to argue convincingly that they are not coming clean: that they do have something to hide, and that they are spending money that need not and, indeed, should not be spent at this point. He will be able to argue that money that could usefully be devoted to the real needs of health and education, and spent in many other constructive ways, is being spent to secure the result that the Government want in the coming referendum.
That will not help the Government. It will suggest to the public not that entry to the euro is inevitable, but that the Government have no real confidence in the objective case. It will weaken the case for entry by suggesting that that case is not strong enough to stand on its own merits. In their own enlightened self-interest, the Government ought to jump at the amendment with alacrity, saying that as they were planning to do what the amendment requires them to do in any event, they might as well accept it.

Sir Michael Spicer: I want to ask the Economic Secretary a brief question. Does clause 122 really apply only to the possibility of expenditure by the Commissioners on taxes that are likely come out of stage 3 of EMU, or is it possible that it could also apply to taxes that are emerging irrespective of stage 3?
We know that a mass of taxation is beginning to emerge in the existing legislation to which we are attached. The Government are conniving and contriving to increase the pace of that taxation at a remarkable rate. Luckily, they have been caught on the hop in regard to, for instance, the withholding tax. Commitments have been made. An answer that I received this week from the Paymaster General stated that not only eurobonds but all other forms of savings would be included, which is good news. Nevertheless, we all know that a mass of taxation is beginning to emerge, irrespective of stage 3.
What does the Economic Secretary think of all the taxation that is beginning to emerge? Is it not right that the amendments should apply, so that at least we know a little more about that taxation and any expenditure that is likely to be incurred by the Commissioners? Is the Bill

giving the Government powers to anticipate the panoply of taxation that is beginning to emerge, irrespective of stage 3?
Of course, it is true that, in relation not just to harmonisation, but to increased expenditure, under stage 3 of EMU, there will be a massive increase in taxation, to which the clause and amendments apply. We all know why that is to be. Under EMU, wages will not be flexible, but prices will be very much on the move upwards and there will have to be a massive transfer of funds from the northern, rich parts of Europe to the southern parts and, therefore, an enormous new system of taxation. If we enter EMU, there will be enormous increases in taxation. Therefore, the clause is applicable.
One can perhaps understand, although it is highly unsatisfactory, why the Government want to prepare for the massive increase in taxation that would occur under stage 3. The real issue before Parliament, however, is whether what we are really doing is passing a clause and a Bill that will give the Government power to create expenditure in anticipation not of stage 3, which the Government seem to be running away from anyway—which some of us think is good news—but of other bad news: what Lord Denning called the on-rush of European legislation, the tidal flow down our rivers and estuaries, which goes on and on. That applies to taxation as much as anything else.
Therefore, it is legitimate to ask: will the clause apply well before stage 3 is entered into? Are the Government not conniving, both implicitly in the clause, and explicitly in the Councils of Europe, in a massive taxation regime, to be imposed on this country, irrespective of stage 3 of EMU?

Mr. Peter Luff: It is natural that high emotions should attach to any debate on economic and monetary union, the single currency and any aspect of it, because people feel strongly on the subject. A variety of emotions have already been expressed by Conservative Members.
I declare myself with my right hon. Friend the Member for Fareham (Sir P. Lloyd), who says that he expects the people of this country eventually to vote no when the referendum is held. I also express the hope that they will vote no, but one does not need to get terribly worked up about the issue to suggest to the Economic Secretary that the amendment is thoroughly pragmatic and sensible and its rejection would be literally incomprehensible.
I agree with much of what has been said by my right hon. Friend the Member for Horsham (Mr. Maude), the shadow Chancellor, but forget all that for a minute. I understand what the hon. Member for Twickenham (Dr. Cable) said about the ability of Parliament to scrutinise the matter, but I do not understand why the amendment should do anything other than commend itself to the Government. I am sure that they have nothing to hide, but a rejection of the amendment would certainly suggest that they did.
The job of the House of Commons is to scrutinise the Executive. That would be made easier by the passage of the amendment, whatever other mechanisms already exist. I am sure that the Government have no wish to conceal from us any aspect of their expenditure in preparing to take us into a single currency—a move that is likely to be rejected anyhow by the majority of the British people.
I ask you, Mr. Deputy Speaker: do you think that any Chief Secretary to the Treasury would conduct negotiations with another Government Department which asked for a few tens of millions of pounds for something and, on the basis of a bland assurance, say, "Oh that is fine, Fred. Have a few tens of millions for that"? We know that that is not the way in which such negotiations are conducted, but, so far, a bland assurance is all that the House has been offered. The Treasury notes on clauses simply say:
the revenue departments may need to spend some tens of millions of pounds on preparations for possible UK entry to the single currency prior to a referendum".
I am against writing blank cheques in the House at any stage, never mind on a matter as controversial and important to the future of the economy and this country's constitution as the single currency. Does the Economic Secretary really think that she could conduct negotiations, if she were ever to be Chief Secretary, on the basis of assurances from her spending Ministers that they would live within their settlement—within the odd tens of millions of pounds here or there?
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My right hon. Friend the Member for Horsham said that it was a debate between pragmatism and dogmatism. He is right. The amendment offers the pragmatic view. What is wrong with exposing the information to public scrutiny? It is simple dogmatism to reject it. It will be dogmatism that makes the House and the country suspicious of the Government's motive in seeking to conceal the information from the House and the people.
The Government have laboured mightily to bring forth their freedom of information proposals and they have been widely criticised. Surely, they do not want to hide information, but they are acquiring a reputation for doing so. Rejection of the amendment will enhance public scepticism about the Government's true motives.
I understand the problem for the Government, and for the Prime Minister in particular. On the single currency issue, as on many others, one could never accuse them of sitting on the fence. They come down firmly on both sides of it. The Prime Minister says that he is the friend of the pound, but, privately, he is an enthusiast for the euro. He says both things to different audiences to confuse the enemy and opposition, but the changeover plan shows where the Government's heart really lies. The Government owe it to the House and to the people who put them in office to explain how much money they are spending on trying to persuade the public to vote against their instincts and for membership of the single European currency.
How much money do the Government intend to spend as a result of the clause? A reference to tens of millions is not good enough for the House. No parliamentarian should go through the Lobby tonight to allow the Government, according to some vague estimates, to spend tens of millions of pounds on something as important as the single currency. No parliamentarian worth his salt should even contemplate allowing the clause to go unamended on to the statute book.
Yesterday, the Government rejected tens of millions of pounds of help for pensioners when there was the option to change the taxation of savings. We estimated that the cost would be £85 million, which is backed by

independent analysis, but a wild figure of £1 billion was thrown out from the Dispatch Box. A few tens of millions of pounds would have made a great difference to those pensioners. A few tens of millions of pounds would make a great difference to the Worcestershire social services department, which could do with a few tens of hundreds of pounds, never mind tens of millions, to help it out with its difficulties.
I have the great honour to be Chairman of the Select Committee on Agriculture. Last week, we had before us the permanent secretary of the Ministry of Agriculture, Fisheries and Food. Clearly, MAFF is scratching around for every odd pound that it can find here and there because of the incredibly tight settlement that was imposed on it during the comprehensive spending review.
The Ministry will face some difficult choices. A few tens of millions of pounds would help it considerably. The Government could abandon their plans to scrap harbour grants, and fishing safety grants, to cut research and development in MAFF and a host of other things, so why does the Treasury set one standard for itself on something as important as our membership of the single European currency, and another standard for every other spending Department? Why did we have the comprehensive spending review? Why did they not just say, "The Government are spending a few tens of billions pounds next year" and leave it at that?
It is preposterous, incredible and an affront to the House that the Government should insist on proceeding with the clause unamended. The Economic Secretary shakes her head in disbelief. I shake mine in disbelief at her. Tens of millions of pounds is a lot of money for every man, woman, child and family in this country, particularly when it is being used to prepare the country for something that it does not want.

Mr. Horam: The clause is a relic of the halcyon days, from the Government's point of view, when they thought that life in government was simple. The plan was obvious—they were hoping to win the next election, and if they did, legislation would be introduced to hold a referendum shortly thereafter. They would hope immediately to win a yes vote for entry into the euro. All would follow, so there had to be a national changeover plan.
My right hon. Friend the Member for Horsham (Mr. Maude) made the point that the national changeover plan contains a lovely chart, which sets out clearly where we proceed from one point to the end point, where we end up with notes. I noticed that it also said "end cash", which, in these circumstances—as I am sure my hon. Friend the Member for Stone (Mr. Cash) will agree—is rather symbolic. Nevertheless, a timetable of three and a half years was established.
Sadly, from the Government's point of view, those halcyon days are over—there are no more glad mornings. Since the European elections, the process has become etiolated, and it has been put ever further into the distant future. Should the Government win the next general election, will there even be a referendum in the first half of the next Parliament? Will there be a referendum at all in the next Parliament? How long will the process take? Even the Prime Minister must realise that the process will take much longer, and that it is much vaguer than it was


a year ago when the national changeover plan was proposed. The process has become extraordinarily vague, but clause 122 encapsulates the sense of certainty that the Government have lost.
As my hon. Friend the Member for Mid-Worcestershire (Mr. Luff) said, there is also the matter of the blank cheque. How much will be required? The Government have mentioned tens of millions of pounds for the process, although Tim Congdon and other economists have calculated that, if we were to go into the euro, the total changeover cost would be £2.5 billion; and that, even if we do not go into the euro, the cost will be £750 million. Those figures are being bandied about, and they cannot be totally irrelevant to the Government—who purchase 40 per cent. of everything purchased in the United Kingdom. The Government have huge purchasing power. Although they have vouchsafed to the House a potential changeover cost of tens of millions of pounds, the extent of their own procurement ensures that the changeover will have a far greater effect on them than that.
I remember when my hon. Friend the Member for Mid-Worcestershire and I were in government, and we were castigated by the then Opposition for signing an allegedly blank cheque for the private finance initiative; yet the PFI was operated wholly within departmental—in my case, the Department of Health—budgets, which could not be exceeded without the Treasury's agreement. However, clause 122 would go beyond any agreement between the Treasury and a Minister. It deals not with a certain unspecified sum that would have to be agreed between Departments, but, literally, with a blank cheque.
The fact is that we are now so far down the line—it is a year since the changeover plan was proposed—that Ministers must have some estimate, even a guesstimate, of the sort of figures involved in the changeover plan. The House should be told that estimate. I agree with my hon. Friends that we should be failing as parliamentarians, not to mention as Opposition Members, if we did not press for that information.
The hon. Member for Croydon, Central (Mr. Davies), in an intervention on my right hon. Friend the Member for Horsham, made the fair point that Opposition Members are not attempting to limit the spending provided in clause 122—and we are not. It would be foolish to try to limit the spending, as we do not know—any more than the Government do, apparently—the correct figures. We are simply trying to expose the information that is available. It is a matter of accountability, not simply of disagreeing with the figures proposed. We simply want the House and the public to know what is likely to be spent, what is being spent, and even what will be spent—as my hon. Friends have said—retrospectively on those very important matters.

Mr. Love: I have listened very carefully to the hon. Gentleman's comments, and he has finally got to the nub of amendment No. 31—parliamentary accountability. However, as Labour Members and the hon. Member for Twickenham (Dr. Cable) have said, there is already such parliamentary accountability in debates in this Chamber

on the Public Accounts Committee's reports. Opposition Members should tell us why that parliamentary scrutiny is not acceptable.

Mr. Horam: First, that is an annual accounting. The National Audit Office examines matters annually, after which the Public Accounts Committee has to decide whether to deal with a specific expenditure item. The Committee has to choose from a crowded list of matters, and it may not have the time, even annually, to examine a specific subject in depth—as the changeover should be examined.
We are not asking for something that the Government are not already doing. In the Government's own document on the national changeover plan, at the very end they state:
The Treasury will report on progress on this further work in the euro preparation unit's next six-monthly report and produce a further plan in around a year's time.
We are simply asking for the EPU's six-monthly report to the Treasury to be reported also to the House. In their own document, Ministers state that they believe that six months is the right interval in which to report on that expenditure stream. I therefore think that it is not unreasonable for hon. Members to ask for any progress to be reported to them in a sensible way. I also do not think that the National Audit Office and the Public Accounts Committee are the right forums to deal with that six-monthly report.

Mr. Oliver Letwin: My hon. Friend is making the most interesting speech. Does he agree that—unless we have that canard come back to us from the Minister—there is a third reason for the House to be provided with the information? The National Audit Office could justify the expenditure as wholly effective and proper—as it would be achieving the very result that the Bill was trying to make it achieve—even if huge sums were spent with the sole purpose of driving us into the euro.

Mr. Horam: Indeed. The other point is that, by definition, the National Audit Office will take a non-political view on the matter, but does not always have the access to Government papers that it should. Perhaps it should have further powers. Moreover, the Public Accounts Committee, with a Labour majority, may or may not decide that it wishes to investigate the matter in depth.
We are right to want to consider the matter separately. There should be an audit trail so that we can examine the matter systematically and discover how the expenditure is being used. We need to know not merely the total amounts involved, but how the money is being spent. I assume, from what the Government have said, that the national changeover plan deals not with private sector expenditure but with expenditure by the public sector for its own purposes. It also provides for information to be provided to the private sector so that it may prepare for a putative national changeover to the euro. That is the content of the changeover plan.

Mr. Loughton: What possible confidence can we have in the Government's accountability to this House when every time Opposition Members have asked Treasury


Ministers for a rough idea of the sort of amounts involved, they have wholly and utterly evaded any figure, or even a stab at a figure?

Mr. Horam: My hon. Friend is right; we will get no estimate this evening from the Economic Secretary. I give full credit to the hon. Lady for her words on green and environmental matters, but on this matter she will be bound tightly by Treasury rules and will not be able to say anything about possible expenditure. However, we are some way down the track on these matters, and we should by now have some idea of what is likely to be spent.

Mr. Luff: Does my hon. Friend agree that it is a question not just of the amount of money but, how the money is actually spent? The lack of any definition of categories of expenditure is extremely worrying and could have wide-ranging implications. The clause, as drafted, is capable of wide interpretation.

Mr. Horam: My hon. Friend is right. I have looked through the reports on the national changeover plan and I can find nothing other than two vague categories in this area—public expenditure on its own purposes, and measures to inform the public of what is happening. We need more definition, clarity and exposure to parliamentary scrutiny.
I agree with my right hon. Friend the Member for Horsham that the proposal is simple pragmatism, although I disagree with those who talk about emotion. This is low-key matter of parliamentary scrutiny, so we can take the emotion out of it. Whether one is for or against the euro, this is a matter of simple, pragmatic parliamentary exposure and discussion which should be dealt with on that basis. I hope that, in those terms, the Government can agree to the amendments.

Mr. Swayne: Were I an evangelical advocate of the abolition of the pound—and, despite the Prime Minister's belief that such a position is daft, I understand that such people exist—I would nevertheless advocate that the Government accept the amendments. The existence of clause 122 demands such scrutiny. The clause states:
Customs and Excise may incur expenditure".
I am afraid that I did not follow my hon. Friend the Member for Mid-Worcestershire (Mr. Luff) in his assertion that tens of millions of pounds were involved. Any amount of money might be involved over any period of time.

Mr. Luff: For the record, I entirely agree with my hon. Friend. That was not my estimate; I was relying on the vaguest estimate that we have from the Government, which is in the notes on clauses. The amount could be hundreds of millions of pounds.

Mr. Swayne: I thank my hon. Friend for that clarification. That begs the question: on what might those amounts, whatever they might be, be spent? The clause states that Customs and Excise may incur expenditure
to exercise their functions relating to taxes and duties (including agricultural levies of the European Community).
Despite racking my brains, I am unaware of how those concerned might properly spend any sum of money, never mind the unspecified amounts suggested by the clause.

Therefore, the clause demands the amendments tabled by my right hon. Friend the Member for Horsham (Mr. Maude). It demands scrutiny and accountability. The lack of accountability and any proper answer to our questions adds to the requirement for such scrutiny.
I will listen with interest to the Economic Secretary when she tells us precisely how she anticipates these funds will be spent. I hope that she will do so when she gets up to tell us that she will accept the amendments. Any reticence on her part, or any decision not to accept the amendments, will only reinforce the sense of suspicion and concern that something is being stitched up behind people's backs in precisely the same way as in 1975, when the people were duped, and one campaign, the "Britain in Europe" campaign, outspent the "No" campaign by 10:1.
I am sorry that the hon. Member for Croydon, Central (Mr. Davies) has left the Chamber. He asked in what way the amendments provided any control over expenditure. In one sense, he was right: they do not give us the ability to control expenditure—which, if I may say so to the Economic Secretary, is a good reason why she should accept the amendments. They do not give us the ability to control whatever it is that she wishes to spend on whatever it is that she wishes to spend it on. They merely give us the right to know what she has spent and what she has spent it on, which would at least provide some constraint on the expenditure.
Not only do we not know what will be spent and what it will be spent on, but we do not know for how long it might be spent. I suggest that it could be a very long time indeed. The Government have made it clear that the event that the expenditures are designed to achieve—the abolition of the pound—cannot happen until there is sustained convergence.
I did not agree with the suggestion of the hon. Member for Twickenham (Dr. Cable) that convergence had already taken place and that the British economy had moved closer to the European economies in the late 1980s. If the British economy is moving in an orbit around the European economies, it is an elliptical orbit, because it would appear that over the past 25 years it has diverged rather than converged.
The key question is: what has caused that? I suggest that the principal cause is the volume of British trade that takes place with the United States and elsewhere and the consequentially large volume of assets and asset income. Because of those long-term changes, it is highly unlikely that the Government's timetable will be realised. The time scale for the expenditure is in fact very long, so it is highly pertinent for us to have the scrutiny that the amendments offer, which would preserve Parliament's ability to hold the Government to account.

Mr. Loughton: Conservative Members have made some powerful points. It was clear that the debate was not going the Government's way when the hon. Member for Croydon, Central (Mr. Davies) was summoned away by pager and the right hon. Member for Hartlepool (Mr. Mandelson) wafted in. I fear, though, that the heat has been too intense even for him and he has slunk away because even he knows that it is a losing battle. He has gone off, officially or unofficially, to represent the No. 10 view with yet another anonymous foreign diplomat.
My right hon. Friend the Member for Fareham (Sir P. Lloyd) put his finger on it: the debate is not about whether and when we want to join the euro or what


damage or good it may do to the economies here or in Europe, but about transparency and democratic accountability.
Today, the Economic Secretary has been in Committee debating the Financial Services and Markets Bill, which is all about accountability, cost to consumers and industry and the guarantee that we are seeking that everything will be up front, which I hope the Government will go along with. This afternoon, the Secretary of State for Health said that of course all the costs of his new-fangled health plan would be made public—so it is ironic that this evening, on an open-ended and potentially enormous issue, the Government are asking for our authority for an entirely blank cheque. As my right hon. Friend the shadow Chancellor said, that cocks a snook at the whole democratic process.
It was only on 23 February that the Prime Minister—uncharacteristically—came to the House and devoted all of 67 minutes to announcing the changeover plan and answering questions on it. That has been the House's sole opportunity to question a member of Her Majesty's Government on the changeover plan. Attempts to secure other appearances have been evaded and wafted aside. Yet within a month of that statement, the Bill was published, with this provision hidden deep among the latter clauses. It gives the Government the most enormous blank cheque which, as my hon. Friend the Member for New Forest, West (Mr. Swayne) said, is not even time dated.
I am not in the business of writing blank cheques. No Conservative Member is. When I receive a tax bill from the Inland Revenue I expect to pay the amount stipulated at the bottom. I do not expect to pay an amount that may be thousands—or even tens—of pounds more. Similarly, when I get my council tax bill I expect to pay the amount stated, not some amount that may be much higher, of which I may—or may not—be informed at a later date, for added expenditure whose details may—or may not—be revealed.
It is ironic that the Government should go on about all their proposals being fully costed. They have done so since before the election. They constantly go on about measures that will be paid for by taxation elsewhere.
Earlier this afternoon, the Economic Secretary used a well-worn phrase when she spoke about the "black hole" that would be left by Opposition proposals, but this clause makes a black hole look like a vicarage tea party. The Government should never again have the temerity to ask Conservative Members how much our amendments to legislation might cost. That remark displayed nerve beyond belief.
The clause is about the inevitability of gradualism, by means of which Britain will be driven into the euro behind everyone's back. It is about membership of the euro by stealth. If the Government stick to their promise of holding a referendum on the matter, the balance of probabilities is that the British public will vote resolutely against entry into the euro. That was true a year ago and remains true now. It will still be true in two years, and in the dim and distant future.
The latest opinion poll showed opposition at a record level, with more than two thirds of the public against joining the euro. The Governor of the Bank of England has said that going into the euro would be the most

enormous leap of faith. Just two weeks ago, the Secretary of State for Trade and Industry, on his not terribly successful visit to China, admitted that Britain's economy was large enough to merit having its own currency. So why are the Government asking for funds to go completely against that statement of fact?
The Government's policy ignores the fact that 80 per cent. of the world's financial trade, and 60 per cent. of commercial trade, is transacted in dollars. So what are the Government doing about preparing to ensure the stability of the dollar? That is a far more important currency for our financial and commercial markets, and is likely to remain so for some years, but the Government are doing nothing to ensure its stability.
What are the Government doing to plan for what the hon. Member for Croydon, Central (Mr. Davies) called the contingencies of a no vote in a referendum? Everything is geared to a yes vote being secured. Nothing is being done to prepare for a no vote, or to protect our more important trade conducted in dollars.

Mr. Bercow: Does my hon. Friend agree that, unless our amendments are passed, the situation will be perilous indeed? The president of the Bundesbank has said that within a single European currency it is an illusion to think that member states can retain their autonomy over taxation policy, but the Government have always rejected that view. Does not my hon. Friend think it peculiar that clause 122 provides for the exercise of functions relating to taxes attendant on entry to European monetary union, when previously the Government have insisted that the prospect of income tax control through EMU was a nonsense? Is there not a contradiction in the Government's position? Have the Government not slipped out the truth, so to speak, by stealth?

Mr. Loughton:: My hon. Friend puts his finger precisely on the point. So great, in fact, is the emergency before us that the Chancellor has joined us for the first time tonight. The right hon. Member for Hartlepool plainly pressed all the panic buttons when he left the Chamber.

Mr. Maude: He would not have phoned the Chancellor.

Mr. Loughton: Wonders will never cease. There has been yet another shift in alliances within the Government.
Only 18 per cent. of the United Kingdom economy is involved in Europe, but 100 per cent. of British business, industry, shareholders and taxpayers will have to pay the cost of a highly expensive, but uncosted, contingency changeover plan. We are always promised cost assessments, but the absence of one for the plan is stark. It is amazing that, before they deal with any of our EU problems—the common agricultural policy, fraud in the Commission, our rebate, the withholding tax, unfair tax competition that penalises our enterprises, and much more expensive social costs—the Government are trying to commit the British people to enormous and unlimited expenditure, although even the Prime Minister has doubts about which side of the fence to come down on.
It is bad enough to be asked to write a blank cheque and to open up a funding black hole. It is worse still that the bank account holders—the British people—are not


allowed to know the amount to be written on that cheque, when it will be written or for what it will pay. I do not share the confidence of my hon. Friend the Member for Mid-Worcestershire (Mr. Luff) because I think that the Government are hiding something. Transparency is the best regulator.

Mr. Luff: I know that it is not the custom of Hansard to put "irony" in brackets after our comments, but I hope that mine were heavy with it.

Mr. Loughton: My hon. Friend spoke so subtly that I did not wish to disrupt the bonhomie that he engendered across the House.
Transparency is the best regulation and the best measure of accountability. The amendment does not deal with the whole issue of the euro, but simply seeks accountability and the ability to hold Labour Members and the Government democratically to account on behalf of our constituents. The changeover plan is purely a contingency plan, but potentially the most expensive contingency in history. We should have none of it.

Ms Hewitt: It is fair to begin by saying that Conservative Members have livened up somewhat during this debate. Indeed, we have heard from almost every Conservative Member present, except of course the hon. Member for Grantham and Stamford (Mr. Davies). It is hardly surprising that he has remained completely silent on the issue.
Once again, the debate has shown that the Conservatives are indeed a single-issue party. It would appear, at least this evening, that they are a single-sex party too. We have heard a great deal of nonsense this evening in an attempt to whip up some excitement on the Opposition Benches.

Mr. Luff: At least we Conservatives are here in numbers to discuss one of the most important issues that faces the United Kingdom, unlike Labour Members.

Ms Hewitt: I do not think that we need to worry about the numbers this evening.
The nonsense that we have heard from Conservative Members started with the right hon. Member for Horsham (Mr. Maude), who accused the Government of asking Parliament to give us a blank cheque to spend—a phrase with which Conservative Members were clearly so impressed that several of them repeated it. That is complete rubbish. Clause 122 establishes the propriety of expenditure by Customs and Excise and the Inland Revenue on preparations for the possibility that the United Kingdom might join the single currency. It does not remove Parliament's right to scrutinise the expenditure, or the requirement for Parliament to give legal authority for such expenditure each year through the annual supply estimates and the Appropriation Act.
It might be helpful if I remind hon. Members that statutory authority for the payment of expenditure out of moneys provided by Parliament must be given each year and can only be given each year by the supply estimates and confirming Appropriation Act. Any expenditure by the Government on euro preparations, like any other expenditure out of moneys provided by Parliament, will

have to be authorised each year by Parliament in the annual Appropriation Act, which provides the legal authority for the expenditure.

Mr. Maude: If that is the case, will the Minister undertake that the House will have the opportunity to debate separately the sums allocated for that line in the Budget?

Ms Hewitt: We will treat it like every other line in the Budget. I am surprised at the right hon. Gentleman. He did not refer to the constitutional practice that was enshrined in the 1932 concordat between the Treasury and the Public Accounts Committee. I assume that as a former Treasury Minister he is familiar with that concordat. It is a rule of propriety that continuing functions of Government, in particular when they involve financial liabilities that extend beyond a given financial year, should also be defined and covered by specific statutes. It is in accordance with that rule of propriety that clause 122 provides specific statutory authority for expenditure on euro preparations.

Mr. Maude: I take it from what the hon. Lady says that the answer to my question is no, the House will not have such an opportunity. If she cannot supply that and as she claims that this is not a blank cheque for the Government, will she tell us what number will be on the cheque? How much money is she proposing to spend? If she does not know, she has the Chancellor at her side—he seems to have come to life—and she should ask him.

Ms Hewitt: I shall come to the figures for expenditure in a minute. As I said, expenditure on that matter will be treated in exactly the same way as any other expenditure from moneys authorised by Parliament. Perhaps it is not surprising that the right hon. Gentleman, who is Maastricht man—the man who signed the Maastricht treaty on behalf of the previous Government—wants to divert attention from his record by his obsession with clause 122.
I shall spell out the procedures once again because the right hon. Gentleman and his colleagues seem to have forgotten them. As with all expenditure incurred by revenue Departments, Parliament votes through estimates. Forecasts of euro preparation expenditure would be included in those estimates. The annual appropriation accounts report the actual outturn against the figures projected in the estimate and those are laid before Parliament in the January following the end of each financial year to which they relate. Moreover, the annual departmental reports, which are laid before Parliament around the end of March, provide a backward look to the previous financial year as well as a forward look to the coming financial year and expand on the detail contained in the estimate and appropriation account. I remind the House of that because so many right hon. and hon. Conservative Members seem to have forgotten it.
There are three main reasons for pre-referendum spending in the Revenue Departments.
First, unless we undertake the necessary practical preparations, the United Kingdom will not be in a practical position to join—even if that were in the national economic interest. That is especially true of the Revenue departments, whose computer systems are among the largest and most complex in Europe.
Secondly, if the UK were to join the single currency, our Revenue departments would come under pressure from UK businesses to allow taxes to be assessed, reported and paid in euro. That would be no more than was offered by countries which participated in the first wave. We have allowed taxes to be paid in euro from 1 January this year. So far, the investment that we have made in IT and other systems to enable that to take place has been small—about £150,000. We considered that to be commensurate with a relatively low take-up. Even without extending the euro options for UK businesses, increased take-up of existing options would require significant investment to ensure cost-effective and accurate services. I am sure that hon. Members would want that.
Thirdly, by making relatively small and well-targeted expenditure now, we can save substantial sums if the UK were to join. That is effective public sector planning, to deliver best value for money, of the kind that any sensible organisation or business would undertake.
The right hon. Member for Horsham and several other hon. Members asked me for detailed figures as to expenditure. I shall set out exactly what was spent up until the end of February 1999. The public sector spent £27 million on ensuring that the City of London and many businesses and departments were able to deal with the euro from its introduction on 1 January. The Bank of England, the euro preparations unit in the Treasury, Revenue departments and the Department of Social Security accounted for most of that preparatory spending. Less than £2 million has been spent on preparing for the possibility of UK entry. The Bank of England spent about £16.6 million preparing for 1999—£17 million in total. The euro preparations unit spent £8.5 million, of which only about £50,000 was related to possible UK entry.
Customs and Excise spent £0.8 million on 1999 preparations—£0.2 million on planning for possible UK entry. The Inland Revenue spent £0.15 million on 1999 preparations—£0.35 million on planning for possible UK entry. In both cases, the spending on preparations for 1999 was to ensure that firms could pay taxes in euro from its launch. The DSS has spent about £0.5 million in total—almost all of which was geared towards possible UK entry, including £0.3 million on set-up and staff costs and £0.2 million on IT analysis. I hope that no Conservative Member will accuse me of lack of detail in these matters.
I point out to the House that the extraordinary concern of Conservative Members over the relatively small amounts involved in this matter sits ill with their complete indifference to the £5 billion hole in their own spending plans, arising from their resistance to the fuel duty escalator and other matters that we discussed earlier.

Mr. Quentin Davies: The hon. Lady has given precise figures, broken down between departments and functions, for moneys spent up until the end of February. Will she give us the Budget figures for prospective expenditure under the same headings? To return the phrase that she used, any well-managed—or half well-managed—business or organisation would have a budget with precise figures.

If the organisation for which she is responsible is at least half well-managed, she will have forward budgetary figures. Will she give them to the House?

Ms Hewitt: In the current financial year, the Inland Revenue plans to spend about £5 million, and Customs and Excise plans to spend about £10 million in total. As for the years beyond that, the planning that we are undertaking at present, following the publication of the outline national changeover plan, will enable us to produce detailed figures. They will be dealt with in the normal way, through the procedures that I have described.

Mr. Letwin: I am most interested in the figures the Economic Secretary has just given. She has told us the spending that is planned for this year—figures of £5 million and £10 million. In which estimates were those approved, and which debate that occurred in this House inspected the validity and propriety of that expenditure?

Ms Hewitt: They are part of the normal estimates, dealt with in the proper way. If the hon. Gentleman did not notice them at the time, that is his problem.
It is absolutely fascinating to have heard from the two sides of the Conservative Treasury team. The hon. Member for Grantham and Stamford said in 1996:
It would be completely crazy and contrary to the national interest to throw away our option to join the single currency. The British people would not respect a Government that did such a thing.
He went on to say:
Taking irrevocable decisions before you have to and before all the essential facts are available is bizarre and indefensible
He is describing the policy of his own party, on whose Front Bench he now sits, as "crazy", "bizarre and indefensible" and
contrary to the national interest".

Mr. Davies: I had better state it quite explicitly, so as to remove any doubt from the hon. Lady's mind. The quotation she has just delivered describes precisely the Conservative party's position on this issue, which I have the honour to defend from the Front Bench.

Ms Hewitt: That is the entirely bizarre explanation that was offered by the right hon. Member for Horsham when he opened the debate. If I understood him correctly—it was difficult to follow his arguments—it is now the Conservative party's position to keep open the option of joining the single currency by ensuring that the British people are never given a chance to join. It is impossible for the Conservatives to square their policy of keeping open the option of joining with their other policy of establishing a constitutional principle that rules out the possibility of joining for five years, 10 years or for ever, depending on who is speaking.

Mr. Bercow: Will such expenditure be undertaken only upon the assumption of continued direct taxation sovereignty, and rejected without it?

Ms Hewitt: We have made it clear on numerous occasions in the House and elsewhere that tax harmonisation—harmonisation of direct taxation—is not required by possible entry into the single currency.


The House knows well the Government's position on the question of taxation, specifically the withholding tax, which has been mentioned.
The fact is that there are three possible positions on the question of the single currency. The first is to rule it out, even if joining a successful single currency would be good for Britain. That is the position of the Conservative party, which has now become the anti-European party of British politics.

Mr. Davies: indicated dissent.

Ms Hewitt: Apparently, that is not the Conservatives' position any longer. Perhaps the right hon. Member for Horsham—Maastricht man—will clarify the position once again. We have heard many different policies this evening, so the right hon. Gentleman, who signed the Maastricht treaty, should tell us what the Conservative policy is.
That is one possible policy: to rule out joining a single currency on principle, even if it would be good for Britain. That policy was described, correctly, by the hon. Member for Grantham and Stamford as "crazy", "bizarre" and
contrary to the national interest.
The second position is that we should join the single currency as quickly as possible, even if doing so were bad for this country. That indeed would be "crazy", "bizarre" and
contrary to the national interest",
even though it is supported by some hon. Members.
The third policy position—the position of this Government—is to join a successful single currency if it is good for Britain. If the economic benefits of joining a successful single currency are clear and unambiguous, then of course it is right that we should join. That is the only policy in the national interest, and it is of course the Government's policy.
We have made it clear, in the statements in October 1997 by my right hon. Friend the Chancellor, and earlier this year by my right hon. Friend the Prime Minister when he launched the national draft outline changeover plan, that the decision on possible entry to a successful single currency should be made by Government, Parliament and then the British people in a referendum. It is in pursuit of that policy of "prepare and decide" that we have published the changeover plan.
The hon. Member for Esher and Walton (Mr. Taylor), a member of the previous Conservative Government and, indeed, a Front Bencher before he resigned in disgust at the anti-European position that his party has adopted, made the position clear when he welcomed the publication of the changeover plan. He said:
Anyone who opposes a national changeover plan must not want to have a referendum, because it can be held only if the British people are prepared."—[Official Report, 23 February 1999; Vol. 326, c. 194.]
Our changeover plan has been prepared in very close consultation with business associations in this country. It is further illustration of how completely out of touch the Conservative party is with British business and the British national interest that it has opposed the sensible planning of the changeover plan, which was welcomed by, among others, the president of the CBI. The changeover plan is

a sensible and necessary step to enable this country to have the option of joining a successful single currency if that would be in the interests of our country.
Under clause 122, as I have explained in considerable detail, we have ensured that the proper rules of propriety and the convention with the Public Accounts Committee are observed. We are extremely supportive of the important role that Parliament plays in the proper scrutiny of public expenditure, but there is a set procedure for reporting on expenditure to the House. The procedure works well, and the Opposition were quite happy to follow it during their 18 years in government. Euro preparations expenditure will continue to be included in the annual estimates, appropriation accounts and departmental reports, along with all the other spending by revenue Departments.
I am astonished that the Opposition seek to impose an extra bureaucratic burden on our tax authorities—one that has nothing whatever to offer in improving real accountability and scrutiny of public expenditure. I hope very much that the right hon. Member for Horsham will have the wisdom to withdraw his amendment. If not, I shall certainly urge my hon. Friends to vote against it.

Mr. Maude: I knew that it would be fascinating to hear how the Economic Secretary would make the case to resist the amendments. Now we have the answer. She did not make the case; she just ignored the case, which became stronger and stronger as each hon. Member rose to their feet. The Economic Secretary has insulted the House of Commons by refusing to address the actual issues and by making a pathetic attempt to sow dissention. She was dismayed by the fact that Conservative Front Benchers have been resolutely united in this approach. It is very upsetting for her, but it is a fact that the whole House ought to be concerned about this issue.
I said when I moved the amendment that the Government were asking for a blank cheque. Having heard what the Economic Secretary has had to say, that remains so. This is an extraordinary clause. As far as I can see, no other clause is a spending clause.
It has been claimed that the National Audit Office already has the power to scrutinise the accounts, but if the expenditure is proper according to the terms of the clause—we have no reason to suppose that it will not be—the NAO will not scrutinise the accounts in detail but simply report on the global sum. The Public Accounts Committee will not get close to the accounts because the NAO will sign off that sum as having been effective spending.
That spending may be effective according to the terms of the clause, but it is effective spending to achieve the wrong outcome. The Government will spend unspecified amounts of taxpayers' money on something that even the Prime Minister has accepted hardly anyone wants. The Economic Secretary has mentioned several figures, but she cannot say in which estimates those figures are contained. She cannot tell us in which National Audit Office report they are scrutinised. There is no proper mechanism by which the House can fulfil its historic function of scrutiny for such extraordinary expenditure.
Coming from a Government who prate about and use the language of prudence and competence, this is a disgrace. The Treasury, which admits to having negotiations to agree hard and fast budgets with other Departments, will simply


say, "We shall spend as much as we think right." The Prime Minister says, "We shall spend tens of millions of pounds over a number of years." That is airy-fairy, and it is intolerable that the House of Commons should not have the ability properly to scrutinise that expenditure. For that reason, I ask the House to support the amendment.

Question put, That the amendment be made:—

The House divided: Ayes 134, Noes 336.

Division No. 225]
9.11pm


AYES


Anisworth, Peter (E Surrey)
Heald, Oliver


Allan, Richard
Heathcoat—Amory, Rt Hon David


Amess, David
Hogg, Rt Hon Douglas


Ancram, Rt Hon Michael
Horam, John


Arbuthnot, Rt Hon James
Howarth, Gerald (Aldershot)


Atkinson, Peter (Hexham)
Jack, Rt Hon Michael


Beggs, Roy
Jackson, Robert (Wantage)


Bercow, John
Keetch, Paul


Beresford, Sir Paul
Key, Robert


Blunt, Crispin
Kirkbride, Miss Julie


Body, Sir Richard
Laing, Mrs Eleanor


Boswell, Tim
Lansley, Andrew


Bottomley, Peter (Worthing W)
Leith, Edward


Bottomley, Rt Hon Mrs Virginia
Letwin, Oliver


Brand, Dr Peter
Lewis, Dr Julian (New Forest E)


Brazier,Julian
Lilley, Rt Hon Peter


Brooke, Rt Hon Peter
Lloyd, Rt Hon Sir Peter (FareHam)


Browning, Mrs Angela
Loughton, Tim


Bruce, Ian (S Dorset)
Luff, Peter


Burns, Simon
MacKay, Rt Hon Andrew


Burstow, Paul
Maclean, Rt Hon David


Cash, William
McLoughlin, Patrick


Chapman, Sir Sydney (Chipping Bamet)
Madel. Sir David


Clappison, James
Malins, Humfrey


Clark, Dr Michael (Rayleigh)
Maples, John


Collins, Tim
Mates, Michael


Colvin, Michael
Maude, Rt Hon Francis


Cormack, Sir Patrick
Mawhinney, Rt Hon Sir Brian


Cran, James
May, Mrs Theresa


Davies, Quentin (Grantham)
Moss, Mascolm


Davis, Rt Hon David (Haltemprice)
Nicholls, Patrick


Duncan Smith, Iain
Norman, Archie


Evans, Nigel
Oaten, Mark


Faber, David
Öpik, Lembit


Fabricant, Michael
Ottaway, Richard


Fallon, Michael
Page, Richard


Fearn, Ronnie
Paice, James


Flight, Howard
Prior, David


Forsuthe, Clifford
Randall, John


Forth, Rt Hon Eric
Redwood, Rt Hon John


Fowler, Rt Hon Sir Norman
Rebathan, Andrew


Fox, Dr Liam
Robertson, Laurence (Tewk'b'ry)


Fraser, Christopher
Roe, Mrs Marion (Broxbourne)


Gale, Roger
Ross, William (E Lond'y)


Garnier, Edward
Ruffley, David


Gibb, Nick
Russell, Bob (Colchester)


Gill, Christopher
Sehpherd, Richard


Gillan, Mrs Cheryl
Simpson, Keith (Mid—Norfolk)


Gorman, Mrs Teresa
Soames, Nicholas


Gary, James
Spelman, Mrs Caroline


Green, Damian
Spicer, Sir Michael


Greenway, John
Spring, Richard


Gummer, Rt Hon John
Stanley, Rt Hon Sir John


Hague, Rt Hon William
Steen, Anthony


Hamilton, Rt Hon Sir Archie
Streeter, Gary


Hammond, Philip
Swayne, Deamond


Hancock, Mike
Syms, Robert


Harvey, Nick
Tapsell, Sir Peter


Hawkins, Nick
Taylor, John M (Solihull)



Taylor, Matthew (Truro)





Taylor, Sir Teddy
Whitney, Sir Raymond


Thompson, William
Whittingdale, John


Tredinnick, David
Wilshire, David


Trend, Michael
Winterton, Mrs Ann (Congleton)


Tyne, Andrew
Winterton, Nicholas (Macclesfield)


Viggers, Peter
Young, Rt Hon Sir George


Wardle, Charles



Webb, Steve
Tellers for the Ayes:


Wells, Bowen
Mrs. Jacqui Lait and



Mr. Geoffrey Clifton-Brown.


NOES


Abbott, Ms Diane
Clelland, David


Adams, Mrs Irene (Paisley N)
Coaker, Vernon


Ainger, Nick
Coffey, Ms Ann


Ainsworth, Robert (Cov'try NE)
Coleman, lain


Alexander, Douglas
Connarty, Michael


Allen, Graham
Corbett, Robin


Anderson, Janet (Rossendale)
Corbyn, Jeremy


Armstrong, Rt Hon Ms Hilary
Cousins, Jim


Ashton, Joe
Cryer, Mrs Ann (Keighley)


Atherton, Ms Candy
Cryer, John (Homchurch)


Atkins, Charlotte
Cummings, John


Austin, John
Cunliffe, Lawrence


Barnes, Harry
Cunningham, Jim (Cov'try S)


Barron, Kevin
Curtis—Thomas, Mrs Claire


Battle, John
Dalyell, Tam


Bayley, Hugh
Darling, Rt Hon Alistair


Beard, Nigel
Darvill, Keith


Beckett, Rt Hon Mrs Margaret
Davey, Valerie (Bristol W)


Begg, Miss Anne
Davies, Rt Hon Denzil (Llanelli)


Bell, Stuart (Middlesbrough)
Davies, Geraint (Croydon C)


Benn, Hilary (Leeds C)
Davis, Terry (B'ham Hodge H)


Benn, Rt Hon Tony (Chesterfield)
Dawson, Hilton


Bennett, Andrew F
Dean, Mrs Janet


Benton, Joe
Denham, John


Bermingham, Gerald
Dismore, Andrew


Berry, Roger
Dobbin, Jim


Best, Harold
Dobson, Rt Hon Frank


Blackman, Liz
Doran, Frank


Blears, Ms Hazel
Dowd, Jim


Blizzard, Bob
Drew, David


Blunkett, Rt Hon David
Dunwoody, Mrs Gwyneth


Boateng, Paul
Eagle, Angela (Wallasey)


Bradley, Keith (Withington)
Eagle, Maria (L'pool Garston)


Bradley, Peter (The Wrekin)
Edwards, Huw


Bradshaw, Ben
Efford, Clive


Brinton, Mrs Helen
Ellman, Mrs Louise


Brown, Rt Hon Gordon (Dunfermline E)
Ennis, Jeff


Brown, Rt Hon Nick (Newcastle E)
Etherington, Bill


Brown, Russell (Dumfries)
Field, Rt Hon Frank


Browne, Desmond
Fisher, Mark


Buck, Ms Karen
Fitzpatrick, Jim


Burden, Richard
Flint, Caroline


Burgon, Colin
Flynn, Paul


Butler, Mrs Christine
Follett, Barbara


Byers, Rt Hon Stephen
Foster, Michael Jabez (Hastings)


Campbell, Alan (Tynemouth)
Foster, Michael J (Worcester)


Campbell, Mrs Anne (C'bridge)
Fyfe, Maria


Campbell, Ronnie (Blyth V)
Gapes, Mike


Campbell—Savours, Dale
Gardiner, Barry


Cann, Jamie
Gerrard, Neil


Caplin, Ivor
Gibson, Dr Ian


Casale, Roger
Gilroy, Mrs Linda


Caton, Martin
Godman, Dr Norman A


Cawsey, Ian
Godsiff, Roger


Chapman, Ben (Wirral S)
Goggins, Paul


Chaytor, David
Golding, Mrs Llin


Chisholm, Malcolm
Gordon, Mrs Eileen


Clapham, Michael
Griffiths, Jane (Reading E)


Clark, Rt Hon Dr David (S Shields)
Griffiths, Nigel (Edinburgh S)


Clark, Paul (Gillingham)
Griffiths, Win (Bndgend)


Clarke, Charles (Norwich S)
Grocott, Bruce


Clarke, Rt Hon Tom (Coatbridge)
Grogan, John


Clarke, Tony (Northampton S)
Gunnell, John



Hain, Peter






Hall, Mike (Weaver Vale)
Mactaggart, Fiona


Hall, Patrick (Bedford)
McWalter, Tony


Hamilton, Fabian (Leeds NE)
McWilliam, John


Harman, Rt Hon Ms Harriet
Mahon, Mrs Alice


Heal, Mrs Sylvia
Mallaber, Judy


Healey, John
Mandelson, Rt Hon Peter


Henderson, Ivan (Harwich)
Marsden, Gordon (Blackpool S)


Hepburn, Stephen
Marsden, Paul (Shrewsbury)


Hesford, Stephen
Marshall, Jim (Leicester S)


Hewitt, Ms Patricia
Martlew, Eric


Hill, Keith
Maxton, John


Hinchliffe, David
Meacher, Rt Hon Michael


Hodge, Ms Margaret
Meale, Alan


Hoey, Kate
Merron, Gillian


Home Robertson, John
Michie, Bill (Shef'ld Heeley)


Hope, Phil
Milburn, Rt Hon Alan


Hopkins, Kelvin
Mitchell, Austin


Howarth, George (Knowsley N)
Moffatt, Laura


Hoyle, Lindsay
Moonie, Dr Lewis


Hughes, Ms Beverley (Stretford)
Moran, Ms Margaret


Hughes, Kevin (Doncaster N)
Morgan, Alasdair (Galloway)


Humble, Mrs Joan
Morgan, Ms Julie (Cardiff N)


Hurst, Alan
Morley, Elliot


Hutton, John
Morris, Ms Estelle (B'ham Yardley)


Iddon, Dr Brian
Morris, Rt Hon John (Aberavon)


Illsley, Eric
Mullin, Chris


Jackson, Ms Glenda (Hampstead)
Murphy, Denis (Wansbeck)


Jackson, Helen (Hillsborough)
Murphy, Jim (Eastwood)


Jamieson, David
Naysmith, Dr Doug


Jenkins, Brian
O'Brien, Bill (Normanton)


Johnson, Miss Melanie
O'Brien, Mike (N Warks)


(Welwyn Hatfield)
O'Hara, Eddie


Jones, Rt Hon Barry (Alyn)
Olner, Bill


Jones, Mrs Fiona (Newark)
O'Neill, Martin


Jones, Ms Jenny
Organ, Mrs Diana


(Wolverh'ton SW)
Osborne, Ms Sandra


Jones, Jon Owen (Cardiff C)
Palmer, Dr Nick


Jones, Dr Lynne (Selly Oak)
Pearson, Ian


Jones, Martyn (Clwyd S)
Pendry, Tom


Jowell, Rt Hon Ms Tessa
Perham, Ms Linda


Kaufman, Rt Hon Gerald
Pickthall, Colin


Keen, Alan (Feltham & Heston)
Pike, Peter L


Keen, Ann (Brentford & Isleworth)
Plaskitt, James


Kemp, Fraser
Pollard, Kerry


Kennedy, Jane (VVavertree)
Pond, Chris


Khabra, Piara S
Pope, Greg


Kidney, David
Pound, Stephen


King, Andy (Rugby & Kenilworth)
Powell, Sir Raymond


King, Ms Oona (Bethnal Green)
Prentice, Ms Bridget (Lewisham E)


Kumar, Dr Ashok
Prentice, Gordon (Pendle)


Ladyman, Dr Stephen
Prosser, Gwyn


Lawrence, Ms Jackie
Purchase, Ken


Laxton, Bob
Quin, Rt Hon Ms Joyce


Lepper, David
Quinn, Lawrie


Leslie, Christopher
Radice, Rt Hon Giles


Lewis, Ivan (Bury S)
Rammell, Bill


Lewis, Terry (Worsley)
Rapson, Syd


Liddell, Rt Hon Mrs Helen
Raynsford, Nick


Linton, Martin
Reed, Andrew (Loughborough)


Livingstone, Ken
Reid, Rt Hon Dr John (Hamilton N)


Lloyd, Tony (Manchester C)
Roche, Mrs Barbara


Llwyd, Elfyn
Rooker, Jeff


Lock, David
Rooney, Terry


Love, Andrew
Rowlands, Ted


McAllion, John
Roy, Frank


McAvoy, Thomas
Ruane, Chris


McCabe, Steve
Ruddock, Joan


McCafferty, Ms Chris
Russell, Ms Christine (Chester)


McCartney, Rt Hon Ian
Ryan, Ms Joan


(Makerfield)
Salter, Martin


Macdonald, Calum
Savidge, Malcolm


McDonnell, John
Sawford, Phil


McGuire, Mrs Anne
Sedgemore, Brian


Mclsaac, Shona
Shaw, Jonathan


McNamara, Kevin
Sheerman, Barry


MacShane, Denis
Sheldon, Rt Hon Robert





Shipley, Ms Debra
Timms, Stephen


Short, Rt Hon Clare
Tipping, Paddy


Simpson, Alan (Nottingham S)
Todd, Mark


Singh, Marsha
Trickett, Jon


Skinner, Dennis
Turner, Dennis (Wolverh'ton SE)


Smith, Rt Hon Andrew (Oxford E)
Turner, Dr Desmond (Kemptown)


Smith, Angela (Basildon)
Turner, Dr George (NW Norfolk)


Smith, Miss Geraldine
Twigg, Stephen (Enfield)


(Morecambe & Lunesdale)
Vaz, Keith


Smith, Jacqui (Redditch)
Vis, Dr Rudi


Smith, Llew (Blaenau Gwent)
Walley, Ms Joan


Snape, Peter
Wareing, Robert N


Soley, Clive
Watts, David


Southworth, Ms Helen
White, Brian


Spellar, John
Whitehead, Dr Alan


Squire, Ms Rachel
Wicks, Malcolm


Starkey Dr,
Phyllis 
Wigley, Rt Hon Dafydd


Steinberg, Gerry Ger 
Williams, Rt Hon Alan


Stevenson, George
(Swansea W)


Stewart, David (Inverness E)
Williams, Alan W (E Carmarthen


rt, Ian (Eccles)
Williams, Mrs Betty (Convey)


Stewart,
Michael, Wills


Stinchcombe, Paul
Winnick, David


Stoate, Dr Howard
Winterton, Ms Rosie (Doncaster C


Strang, Rt Hon Dr Gavin
Wise, Audrey


Straw, Rt Hon Jack
Wood, Mike


Stuart, Ms Gisela
Worthington, Tony


Sutcliffe, Gerry
Wray, James


Taylor, Rt Hon Mrs Ann
Wright, Anthony D (Gt Yarmouth)


(Dewsbury)
Wright, Dr Tony (Cannock)


Taylor, Ms Dart (Stockton S)



Taylor, David (NW Leics)
Tellers for the Noes:


Temple—Morris, Peter
Mr. David Hanson and


Thomas, Gareth (Clwyd W)
Mr. Clive Betts.

Question accordingly negatived.

Orders of the Day — Schedule 1

RATES OF VEHICLE EXCISE DUTY FOR GOODS VEHICLES ETC

Ms Hewitt: I beg to move amendment No. 14, in page 97, line 29, column 4, leave out '2,320' and insert '2,230'.
I hope that this amendment will not cause anything like the controversy caused by the previous amendment. It amends schedule 1, which concerns vehicle excise duty for goods vehicles, and corrects a typographical error in the tabled rate for three-axle rigid goods vehicles weighing between 23 and 25 tonnes. The provision should have remained unchanged at 2,230 lbs rather than the 2,320 lbs set out in the schedule.
This corrective amendment reflects Government policy: rates for all goods vehicles, apart from the more heavily loaded vehicles that became available from 1 January, should be frozen, as they were last year. Lorries relicensed since the Budget have of course been charged at the correct rate. I trust that there will be no opposition to the amendment.

Amendment agreed to.

Orders of the Day — Schedule 2

VAT: GROUPS OF COMPANIES

Mr. Heathcoat-Amory: I beg to move amendment No. 1, in page 102, line 15, at end insert—
'(5) For the purposes of subsection (2) above the Commissioners may only give notice in the circumstances specified in subsection (2) above if it appears to the Commissioners that—

(a) a company is engaged in a VAT avoidance scheme,


(b) membership of the group threatens the collectability of tax, or
(c) the revenue loss associated with its membership of the group goes beyond the natural consequences of grouping.'.


Although the amendment will be spoken to by my hon. Friend the Member for West Dorset (Mr. Letwin), I am moving it because of the rules of advocacy. My hon. Friend may conceivably have an indirect interest, which he will doubtless describe to the House.

Mr. Letwin: I declare a possible interest in that there may be clients of the bank of which I am a director who could be affected by the amendment.
The amendment protects not so much against a Henry VIII clause—we have done much of that in this Parliament—as against a Charles I clause of the kind that has also become all too familiar. Such a clause would give Customs and Excise tyrannical powers over those who are unlucky enough to fall into its clutches. When the issue was raised in Committee, a great many organisations were quoted—organisations that are not politically partial, but rather, are bound by the rules of looking after the interests of their members and, indeed, the public interest. The Institute of Indirect Taxation said:
Under all of these provisions"—
to which the amendment relates—
the trigger for Customs powers is subjective.
The Law Society said that
it would be possible for the Commissioners retrospectively to degroup a company…that…ignores the possibility of a mistake being made by the Commissioners".
The Institute of Directors said:
The power, given by new section 43C (1) and (2),"—
to which the amendment relates—
to remove companies from groups where that is necessary is far too wide.
The Institute of Indirect Taxation had more to say, as did many other bodies, including the Institute of Chartered Accountants.
The interesting point, which gave rise to our amendment, is that the Paymaster General—not the Financial Secretary, whom I excuse from blame entirely—remarked to the Committee, no doubt with the consent and acquiescence of the Financial Secretary:
It is right that Customs has broad powers and some discretion, as has long been provided in our legislation. That is to ensure that abuse is dealt with adequately…That approach…is the conventional way to proceed."—[Official Report, Standing Committee B, 13 May 1999; c. 174-182.]
There is some truth in the hon. Lady's observations. Alas, we find that the conventional way to proceed, under Governments of both colours over many years, has been to give quite excessive and undue powers to Customs and Excise, and it is about time that something was done to correct that.
Finding a means of restricting the excessive, arbitrary powers of Customs and Excise—in order to protect legitimate businesses from the exercise of those arbitrary powers in ways that cause significant dislocation for many of our constituents—will be a major plank of the Conservative party's policies for going forward. That is particularly the case in respect of people with small and

medium-sized businesses which cannot afford to employ legions of highly paid advisers to protect them against the exercise of those powers.
9.30 pm
Amendment No. 1 is astonishingly modest: I am amazed by our moderation. It would merely specify a little more closely how the commissioners must go about their actions. It says that commissioners can give notice of degrouping only if it appears to them that
a company is engaged in a VAT avoidance scheme … membership of the group threatens the collectability of tax, or … the revenue loss associated with its membership of the group goes beyond the natural consequences of grouping.
Straightforwardly, that amounts to saying that the commissioners must satisfy themselves that there is a genuine abuse.
It is a perfectly reasonable proposition that the commissioners, before taking action that could be highly deleterious to the companies against which they are taking it, should at least satisfy themselves that there is a real abuse, and that it is not an honest and innocent scheme.
I note that the Financial Secretary has closed her mind to this proposal, because she is happily engaged in badinage with her colleagues on the Front Bench. I am afraid to say that that surprises us not in the least. We have just debated a proposal from my right hon. Friend the shadow Chancellor that was so eminently reasonable that the Economic Secretary was unable to find the slightest rationale for defeating it. We now have another such reasonable proposal, and I am sure that it will meet the same fate. Her Majesty's Government are unfortunately unwilling even to listen to the argument. The time will come when amendments such as amendment No. 1 will be seen for what they are: modest, perhaps even pusillanimous. In due course, we will need far more protection for the ordinary and innocent business man against the exercise of arbitrary power.
This is a test case. If the Government insist on rejecting amendment No. 1, it will show that even the most modest constraints on that arbitrary power, such as the requirement that commissioners should satisfy themselves of an abuse, is too much for the Government. The Financial Secretary should bear in mind the fact that—if she is lucky enough to catch your eye, Mr. Deputy Speaker, as I am sure she will be—what she says in her usual mellifluous and elegant fashion will be recorded in Hansard, and will ring down the ages as a statement of the Government's intention, which is that things should be done in the conventional way. That is what the Government will stand for: the proposition that the conventional way should be followed, and Customs and Excise should be given wholly arbitrary powers.
Some slight purpose will have been fulfilled by this debate if we at least get it on record that that is the Government's intention and design. It would, of course, be far better if, having heard these words, the Financial Secretary had a damascene conversion and accepted amendment No. 1, but that will not happen. We could then get on with the serious business of trying to put to rights something of which Governments of both colours—this is not a party point—have been culpable for the past 50 or 100 years, and which the Opposition at least intend to do something about.

Mr. Fabricant: I support the amendment, primarily because I have experienced the abuse that my hon. Friend


has described. He referred to the badinage among hon. Members on the Treasury Bench. I suspect that the reason for that badinage is that they have not been abused as I have, because none of them have run a business. None of them have had the experience of Customs and Excise officers descending on them in the early hours. They have not heard the kick of the jackboot on the door—perhaps I exaggerate—and have not endured an inspection of their books lasting a week or two.
Customs and Excise has a long history. The revenue men have powers that go back 300 or 400 years. Their powers exceed and have existed for longer than the powers of the police.
I hasten to add for the record that I was abused, and my company was abused, because the company—although it was a new company—had started from scratch, and ended up exporting all over the world. As a consequence, we incurred a lot of input tax—because we were purchasing items and paying VAT—but very little output tax, because we were exporting at zero rates. Most of our VAT returns, therefore, related to claims rather than payments.
There we were, a small company, trying to trade and trying to build up a reasonable base not only of suppliers, but of English—British—employees. Then the jackboot came: Customs and Excise arrived, and for two or three weeks we experienced complete disruption. No sales could take place, and while Customs and Excise went through our books with a fine-toothed comb—this was long before the days of computers—we were in cashflow difficulties, and were barely surviving as a result. Fortunately we got through that, and my career culminated on the Back Benches in the House of Commons.
The amendment is reasonable. My hon. Friend the Member for West Dorset (Mr. Letwin) described it as a test case; I would go further, and say that I consider it to be an acid test of the Government's good intent. Is it unreasonable to expect the Government, Customs and Excise and the commissioners to pay a little attention, and exercise some caution, before kicking down the gates of a small business and examining its books?
The amendment is also simple. The commissioners need to satisfy themselves that
a company is engaged in a VAT avoidance scheme"—
in other words, not engaged in its lawful business. Is that unreasonable, I ask the Financial Secretary? I do not see how she can say that it is.
The commissioners also need to satisfy themselves that
membership of the group threatens the collectability of tax"—
in other words, that the group has not been formed as a natural consequence of the functions of the company. Is that unreasonable, I ask the Financial Secretary?
Finally, the commissioners must satisfy themselves that
the revenue loss associated with its membership of the group goes beyond the natural consequences of grouping.

Mr. Letwin: Let me make it clear, for the avoidance of doubt, that these are alternatives. The commissioners need to satisfy themselves of either the first, the second or the third. The amendment is even more modest than my hon. Friend suggests.

Mr. Fabricant: My hon. Friend is right. Reasonableness is the essence of the amendment. The question—the acid test—is this: are the Government going to be reasonable, and do they want the commissioners to be reasonable?
I know that the Financial Secretary is a reasonable lady, although she and her bedfellows—perhaps I should not say that; she and her colleagues—lack business experience. I therefore hope that they will accept the amendment.

Mrs. Roche: I find myself in a quandary. To misquote Oscar Wilde, I can resist everything but flattery. I have heard two flattering speeches, from the hon. Members for West Dorset (Mr. Letwin) and for Lichfield (Mr. Fabricant); however, I must disappoint them this evening. [HON. MEMBERS: "Oh!"] I know: it almost brings tears to my eyes as well.
I was rather surprised by the speech of the hon. Member for Lichfield. He will know of the many hard-working men and women in our Customs and Excise service who do such sterling work for us on a number of issues—not just on VAT, but on combating drugs and smuggling. It is incumbent on hon. Members on both sides of the House to pay tribute to those brave men and women.

Mr. Letwin: I hope that the Minister might recognise the following point. It is the only defence of those hard-working and conscientious individuals that there should be rules that ensure that they do not have to fulfil their function by acting arbitrarily to squeeze every last penny out of every rock. I hope that she will recognise that the intention is precisely to protect those individuals, not to attack them.

Mrs. Roche: I am grateful for that clarification, because I had thought for a moment that the all-party consensus on law and order issues was in danger of breaking down. If the hon. Gentleman is a little patient, I think I can reassure him.
The one thing that the hon. Members for West Dorset and for Lichfield did not mention was that, if one looks at the whole package, of which the measure is a very small part, the Government's proposals on the sector have been welcomed by business as a whole. The proposals are the result of a long period of consultation and have gone down well.
The power to remove companies is necessary, as customs currently has powers to refuse applications to groups on revenue protection grounds, but no powers to remove companies when the same revenue concerns arise involving an existing group member. The inability of customs to remove companies from groups facilitates abuse and can lead to distortions of competition. Anyone who believes that having a level playing field is good will not support the amendment.

Mr. Letwin: Will the hon. Lady give way?

Mrs. Roche: I am anxious to make a little progress. I want to say something that might help the hon. Gentleman. I will be nice to him, so will he take his seat for a moment?
I am sure that it is not the intention of those who have tabled the amendment to facilitate abuse, especially in light of the successive years of legislation—the hon. Member for West Dorset was generous enough to say, unlike some of his right hon. and hon. Friends, that Conservative Governments have gone down exactly the


same route—that have been necessary to counter some of the abuse of what is an important business facilitation measure. That includes legislation that was passed by the Opposition when they were in power.
Members who have read the Hansard—the hon. Member for West Dorset has already referred to it—of the Standing Committee debate will know that the criterion in the amendment is the same criterion that my hon. Friend the Paymaster General said would be applied by customs to all the revenue protection powers in the clause.

Mr. Letwin: Now the hon. Lady is absolutely right. All we are trying to do is to enshrine in law what her colleague said would be a matter of practice. How can she possibly object to that? Is not that the ultimate reasonable activity of Parliament—to enshrine in law what is regarded as reasonable practice?

Mrs. Roche: I know that the hon. Gentleman is anxious about the matter, but, if he contains himself for a little longer, I will deal with that.
The amendment seeks to set that criterion in law in respect of the new powers to remove companies from groups for the protection of revenue, but the amendment is defective. I have had to take Conservative Members to task before when they have tabled amendments that are technically defective because my right hon. and hon. Friends might be tempted by such amendments, which would put them on a path that could not be said to be one of righteousness. There is no mention of the approach that should be taken over refusing applications on the same grounds. Rather than creating more certainty for business, this limited amendment would create more uncertainty and reintroduce distortions—precisely what the Bill is meant to overcome.
Although the amendment may be superficially attractive, when we look at its detail, it raises more questions than it solves. Customs will apply, as it always does, those good principles, but there are sound—

Mr. Letwin: Will the hon. Lady give way?

Mrs. Roche: No, I will not.
There are sound reasons why those principles should not be defined in law. That is why the Paymaster General stated in the Standing Committee that she had asked customs to provide a business brief. Tomorrow, that brief will be published and placed in the Library. It will state the circumstances in which all the revenue protection powers in schedule 2 are likely to be used, thereby providing assurance to business that customs will not use revenue protection powers merely to raise revenue.
9.45 pm
Amendment No. 1 deals with a very important matter. I am sorry that, today, Opposition Members have not sought to talk—as they were generous enough to do in Committee—about the great benefits for business that the Bill will provide.

Amendment No. 1 would only confuse the issue, and I urge the House to reject it.

Amendment negatived.

Orders of the Day — Schedule 5

SCOTTISH PARLIAMENT AND DEVOLVED ASSEMBLIES: EXEMPTIONS AND RELIEFS

Amendment made: No. 25, in page 112, line 37, leave out from 'Kingdom' to end of line 38 and insert 'and—

(a) any European Union institution in Brussels, Luxembourg or Strasbourg, or
(b) the national parliament of another member State.".'.—[Mrs. Roche.]

Orders of the Day — Schedule 20

REPEALS

Amendment made: No. 35, in page 175, line 26, at end insert—


'(2) BUSINESS ASSETS: ROLL-OVER RELIEF


Chapter
Short title
Extent of repeal


1992 c. 12.
The Taxation of Chargeable Gains Act 1992.
Section 193.


This repeal has effect in accordance with section (Business assets: roll-over relief)(2) of this Act.'.—[Mrs. Roche.]

Order for Third Reading read.

The Chief Secretary to the Treasury (Mr. Alan Milburn): I beg to move, That the Bill be now read the Third time.
The Finance Bill reforms and strengthens the British economy by rewarding work, enterprise and families. Quite rightly, it has been subjected to detailed scrutiny, both on Report and in Committee. I thank all right hon. and hon. Members, some of whom are in the Chamber, who contributed to our consideration of the Bill in Committee. I particularly thank my hon. Friends for the excellence of their work on the Bill, but also thank Opposition Members for their work—not least because it has given us some profound insights into where they stand on so many key issues of tax policy, spending policy and economic policy.
The Bill helps to lock in the economic stability that the Government have been creating since we entered office, and introduces new measures to improve—for the long term—the productivity and performance of the British economy. The Bill contains measures to improve investment, to strengthen links between business and education, and to improve the tax position of growing firms.
The Bill's measures give Britain the lowest rates of company taxation in our history. Indeed, the measures give us the lowest tax rates of any major industrialised country anywhere in the world. Moreover, those rates will not apply for only one year, but will remain at that level, or below, for the remainder of this Parliament. They are evidence of the Government's determination to make Britain the very best place for businesses to invest, and the very best place for businesses to do business.
The Finance Bill helps put in place the building blocks not only for an enterprise economy, but for a fair society—the current Government, unlike the previous one, recognise that the two go together. In our two previous Budgets, we helped people move from welfare


to work. We are now taking that fundamental reform a step further, by ensuring that, when people go into work, it pays.
For years, successive Governments have taken too much tax from those who work hard but are by no means wealthy. All too often, the working poor have paid the price for that failure. Some people have faced marginal tax rates of as much as 100 per cent. or more when trying simply to move off benefit and into work.
The Finance Bill, with the minimum wage and the working families tax credit, begins to end the perverse incentives that have encouraged benefit dependency. We do so in recognition, first, that work is the best way out of poverty; and, secondly, that—for too many people, for far too long—financial uncertainty has acted as a real barrier.
The Bill ensures that we now have the lowest starting income tax rate in 35 years. Next year, we will have the lowest basic rate of income tax in some 70 years. On any count, those are major reforms to the tax system. They will make working families better off. They will cut the tax burden on the average family to below 20 per cent. for the first time in more than 20 years.
In contrast to the practice of the Conservative party when it was in power, those tax cuts honour the pledges that we made at the last election. [Interruption.] Before the shadow Chancellor starts to chunter too much, I say to him that the cuts are a reminder—if reminder were needed—that, while this Government keep our tax promises, the previous Government failed to do keep theirs. We said that we would cut VAT on fuel and that we would introduce a 10p rate of income tax. We have done so.
We said that we would do something else—we promised more support for families. This Finance Bill delivers that promise. The new children's tax credit will provide more help to those who need it most, when they need it most—families bringing up children. By the end of this Parliament, we will be spending £6 billion more on children than we were at the beginning. In total, as a result of the measures that we have taken to date, some 700,000 children will be lifted out of poverty.
All those measures are opposed by the Conservative party. Frankly, the Opposition have done the House and the country a favour during the passage of the Bill. They have helped put clear blue water between us and them. While this Labour Government's policies are helping the poorest families in the land, it is now clear from the passage of the Bill that the Tories' policies would penalise the poorest families in the land.
The Tories' pledge to abolish the working families tax credit would land 1.5 million families—many of them the poorest in the land—with an extra £24 a week on their tax bills. Their opposition to the minimum wage, to the 10p starting rate of income tax and to the children's tax credit would mean less help for hard-working families, middle and low income alike.

Mr. Nick Gibb: Where in the Labour manifesto did it say that the Labour Government would raise taxes to the tune of £40 billion over the lifetime of this Parliament? Where did it say that

newly retired couples who will reach the age of 65 after next April will lose £500 of income that they had expected to have at retirement?

Mr. Milburn: I will come to that £40 billion in a moment because the hon. Gentleman, before he was moved on, helped contribute to the £40 billion black hole in the Tories' spending plans. The Bill and previous measures will help to cut taxes and will ensure that tax plans for this year, next year and the year after are all lower than if the Conservative party had been returned to power at the last general election.
By reversing policies that are designed to make work pay, the Opposition would reinvent the spiral of benefit dependency that they now say they want to eradicate. However, the Opposition have revealed something else, too, during the passage of the Bill. They have revealed that they cannot be trusted with our country's public finances or with our country's key public services.
In the last two years, the state of the public finances has been transformed. We have cut public sector borrowing by some £32 billion. The approach that we have taken has been prudent and disciplined, and this Finance Bill continues that process. It locks in the stability that we have been creating by keeping the public finances under control.
Over the next five years, there will be a current budget surplus of £34 billion. The Government are now living within our means, and yet we have been able to invest extra money in our key public services—an extra £40 billion for our schools and hospitals alone over the next three years.

Mr. Maude: rose—

Mr. Milburn: When the right hon. Gentleman comes to the Dispatch Box, perhaps he will say how he intends to match those plans.

Mr. Maude: I shall say for the umpteenth time that we support those increases in health and education spending. However, let the Chief Secretary answer this. Before the last election, the Prime Minister said in clear terms that Labour had no plans to increase taxes at all. What does the Chief Secretary think that he meant by that?

Mr. Milburn: What we said before the general election is contained in our manifesto. We said that we would not increase income tax rates, and we have not; indeed, we have reduced them. We said that we would not extend VAT to children's clothes, food, books and newspapers and public transport fares, and we have not. We said that we would introduce a 10p rate of income tax, and we have.
If the shadow Chancellor wants to compare and contrast the tax promises that we made at the general election with those that his party manifesto made at the 1992 election, I am happy to go through that charade. He might have come to the Dispatch Box and explained how it is that one moment he describes our spending plans as reckless—and the Leader of the Opposition accuses my right hon. Friend the Chancellor of embarking on a spending spree—and the next he says that he wants to match our spending on health and education.
It is no good willing the end without being prepared to will the means. The Conservatives have failed to put their money where their mouth is. Worse, they have tabled proposals that would take money away from the very services that they say they support.

Mr. Maude: As the Chief Secretary seems unwilling to defend the Prime Minister on his clear statement before the general election, will he say what he understood the Prime Minister to mean when he said just after the election that the Government would cut social security bills? Did he believe that the Prime Minister meant that he would increase those bills by £38 billion?

Mr. Milburn: The right hon. Gentleman must be aware of what has happened under this Government as compared to what happened under the previous Government. He must know that social security spending is rising at half the rate under this Government, so we will take no lectures from him.
During our proceedings on the Bill, the Conservative party tabled amendments that would rob the public purse of almost £25 billion over the next three years and Conservative amendments to last year's Finance Bill would add another £15 billion to that total. [Interruption.] If the shadow Chancellor would stop chuntering and start listening, he might learn something. His party lost the trust of the British people at the general election because it broke its promises and it continues to make promises that it cannot keep.
Our proceedings have highlighted all too clearly the contrast between the Government and the Opposition: £40 billion extra for our key public services with the Government or £40 billion less with the Conservatives; more help for families with the Government or less with the Opposition; more help to get people into work and to help them to stay there with the Government or less for both with the Conservatives; economic stability with the Government or a return to stop-go, boom-bust with the Conservatives.
We have seen that today's Conservative party is not only out of touch and out of date but out of the political mainstream; it is no wonder that people say that it is the most extreme in living memory. The Bill will help to build a stronger economic future for our country and ensure that there is opportunity for the many and not only the few. It provides the right incentives for people to work and for business to invest. In short, it offers a better deal for both British business and the British people. It deserves the support of the House.

Mr. Heathcoat-Amory: In March, the Chancellor introduced a tax-raising Budget, followed in short order by a tax-raising Finance Bill. Even more recently, we have been faced with a tax-raising Report stage. Unusually—it is certainly unprecedented in my experience—the Government only yesterday tabled eight additional money resolutions, each of which was, by definition, tax-raising. We have had a series of Budgets, each of them tax-raising, and a series of provisions this year whose object has also been to raise taxation.
This is a bad Bill. However, in the debates during its progress through the House, we have managed to puncture the Chancellor's self-satisfied arrogance and complacency. Instead of strengthening the British economy, as the Chief Secretary claimed, he has put at risk the golden economic legacy that he inherited from the previous Conservative Government at the general election.
The Chief Secretary made the truly remarkable claim that social security expenditure was rising less sharply now than under the previous Government. That is flatly untrue, as statistics from the ever-helpful House of Commons Library show. In the three years to 1998–99—in other words, the Conservative Government's last year of office and the years for which Conservative planning was taken over by the Labour Government—social security spending fell by 0.2 per cent. per year, in real terms. Conversely, the Library figures show that, from 1998–99 onwards, when the Labour Government have been on their own, social security spending is set to rise by 3.2 per cent. each year, in real terms.
That is a graphic illustration of how the Government have turned a satisfactory plateau of real-terms social security expenditure into a steep rise. That is where the money is being spent. Instead of taking money from the social security budget and spending it on other desirable areas of social expenditure, the Government are wasting it on an acceleration of social security expenditure. That is documented in the figures that I have given.

Mr. Leslie: Will the right hon. Gentleman give way?

Mr. Heathcoat-Amory: No. I am correcting the facts and figures misrepresented to the House only a few moments ago by the Chief Secretary.
The Bill, and the Budget before it, contain some gimmicky handouts. Interestingly, however, some of the handouts announced in the Budget speech are not to be found in the Bill. For example, in his Budget speech, the Chancellor proudly announced research and development tax credits. Business looked forward to them, but the Bill says nothing about them. The proposal is a fraud. Conversely, the Bill contains some tax increases that were not announced in the Budget speech. That is all so appropriate for a stealth-tax Government.
On Budget day, the Government published a leaflet called "Budget '99", which purports to be a summary of the Budget measures. In the section entitled "Raising Productivity", the research and development tax credit is said to be an item that will be "delivered" in the 1999 Budget. Yet, as I have explained, it was not delivered, in either the Budget or the Bill.
The leaflet does not mention something that is in the Bill—the sharp and damaging increase in stamp duty. That is set to raise £300 million a year, mostly from the business sector. The research and development tax credit may come into effect in the year 2001, and will benefit business by a maximum of £100 million.
The leaflet is nothing short of state-sponsored propaganda. It is biased, partial and a disgrace. The taxpayer was expected to finance a leaflet—at a cost of more than £100,000—that gives a distorted and misleading account of the Budget measures.
The Finance Bill has been criticised for making the system more complicated. Every Finance Bill introduces more rates, more tax bands and more complex relief. Last year, the capital gains tax system—again unreformed this year—set up all sorts of perverse incentives, additional rates and multiple allowances. The Government say that they are trying to make the tax system simpler to aid self-assessment, but it is becoming more difficult for individual taxpayers and more expensive for businesses. The Government have begun a regulation drive to make everything more complicated and expensive, and that—just as surely as tax increases—is undermining the competitiveness of the British economy.
The Bill abolished married couples allowance, but there was another trick. The Chancellor announced that, although the allowance was being abolished, it would be replaced by children's tax credit. The trick is that married couples allowance is abolished immediately, saving the Government over £1.5 billion a year, but children's tax credit will not come in until 2001, and will cost less than the amount saved.
We have debated fuel duties again today, so I shall say only that the Government no longer seriously deny the damage to the road haulage industry. Fuel represents a third of the industry's running costs, and making our fuel the most expensive in Europe obviously makes the industry uncompetitive in Europe. Road haulage, by definition a mobile industry, will lose out in the single market. Those blindingly obvious truths are beginning to register with the Government, but it is too late for many in the haulage industry who have already suffered, and too late for British manufacturing industry, which has been made uncompetitive. I hope that it is not too late to persuade the Government to end the damaging fuel escalator in next year's Budget.

Mr. Geraint Davies: rose—

Mr. Heathcoat-Amory: I cannot resist giving way to the hon. Gentleman.

Mr. Davies: Having mentioned stealth tax, would you agree that, when you add up the reversal of your policy—

Mr. Deputy Speaker: Order. The hon. Gentleman must use the correct parliamentary language.

Mr. Davies: When the right hon. Gentleman adds up the effect of his policies on the fuel escalator, elimination of the tobacco escalator and the married couples allowance, does he not find that the Conservative party will offer the electorate a bill amounting to tens of billions of pounds at the next election? How will he pay it?

Mr. Heathcoat-Amory: I am glad to give way to the hon. Gentleman, because he is always helpful. He has given me the chance to state that we are trying to chip away at the extra taxes that the Government are levying on British industry and individual taxpayers in defiance of their manifesto and election promises. The hon. Gentleman should thank us for trying to return the Government to the platform on which he was elected.
On savings, the Government do not seem to understand that it is no good exhorting people to save more, or trying to get people off welfare and on to depending on their

own savings, if savings are being made more expensive and less attractive. They have done it in every Budget since the general election. In the first one, they carried out a £5 billion a year raid on pension funds. No one will trust the Government on pensions again.
Then we had the quite unnecessary vandalism against personal equity plans and tax-exempt special savings accounts—two successful and established savings vehicles that were trusted by the saving public. The Government introduced the wholly unknown, untried and untested individual savings accounts, with which they are having so much difficulty. We confidently expect that they will in due course produce amendments to try to retrieve the situation. Why put the saving public to all the expense and difficulty of changing from a product that they understand to one that they do not?
In this Finance Bill, the l0p starting rate of income tax was announced. However, the Government deliberately did not make it applicable to savings. What sort of a message does that send? Do not bother to save; the Labour Government do not believe that it is necessary.
Exactly the same is true of the continuing scandal over dividend tax credits and the Government's failure to repay those credits, or an equivalent sum, to non-taxpayers. They have compensated everyone else—the better off—for the withdrawal of dividend tax credits, but despite being asked, they have deliberately refused to compensate the poorest non-tax paying savers. They are operating a sort of means test. They have looked after the better-off savers, but they are refusing to compensate the poorest category of saver—those who are below the tax threshold. That is a continuing scandal and it goes some way to explain why the Government are losing touch with their traditional supporters and why those ex-supporters have been making known their views in the recent local government and European elections. It is not surprising that the savings ratio has fallen and continues to fall.
Before I conclude, I must touch on another extraordinary fact that we unearthed from the Government despite all their efforts to keep the information to themselves: the fact that at least three of the provisions in the Bill may be incompatible with the requirements of the European Union and may in due course have to be withdrawn or repealed. One such provision is the measure to help the film industry. The second is the 40 per cent. first-year allowance for small and medium-sized companies and the third is the 100 per cent. first year allowance for small and medium-sized companies in Northern Ireland.
We have discovered that each of those measures, which were all introduced by the Government, are under investigation by the European Union business tax committee, which is chaired by the Paymaster General. We did not know that when we debated those measures in Committee. The Government did not tell us that they might all have to be withdrawn if that committee concludes that they represent unfair tax competition. They may have to be repealed because that committee is not advisory but mandatory. The Government have voluntarily agreed in advance to honour its conclusions. In a debate in Committee in November 1997, the Paymaster General said that, if the Government agreed to the code of conduct on unfair tax competition in Europe, they would honour the committee's conclusions and abide by its recommendations.
So, there we have it. The House of Commons and this Chamber this evening may think that they are regulating tax matters on which they are sovereign, but I am afraid that that is no longer the case. The Government have admitted—the information had to be extracted from them—that at least three of the measures that we are being invited to pass this evening are vulnerable to being withdrawn because of the conclusions of a European Union committee. If that is not the case, the Government still have time to reassure us to the contrary. When we debated the matter yesterday, they not only gave us no assurances on that, but they appeared to confirm that it was indeed the case.
A recent example is provided by the debate on amendment No. 31, introduced by my right hon. Friend the shadow Chancellor. The House is being asked to give the Government authority to spend unspecified amounts, during an unspecified period, on unspecified items in respect of the national changeover plan. That is a disgrace, and, in her response to that debate, the Economic Secretary made matters worse by refusing to give the House the details that it reasonably requires.
In conclusion, the Bill remains a bad Bill; it is a tax-raising and stealth-taxing Bill. It is interfering and damaging; we shall vote against it.

Mr. Edward Davey: Sometimes our debates generate a great deal of heat, and sometimes they shed a great deal of light. Unfortunately, the former is true of this Third Reading debate. The Chief Secretary to the Treasury and the shadow Chief Secretary to the Treasury, the right hon. Member for Wells (Mr. Heathcoat-Amory), failed to mention the two most historic tax changes in the Bill. Those truly historic changes are the abolition of mortgage interest tax relief—[Interruption.]—and of the married couples allowance. From a sedentary position, the hon. Member for Edmonton (Mr. Love) cheers the abolition of mortgage interest tax relief; he is right to do so. That relief needed to be abolished, and I am surprised that the Chief Secretary failed to mention it in his speech.

Mr. Geraint Davies: Will the hon. Gentleman give way?

Mr. Davey: If I must.

Mr. Davies: Can it be true that the spokesperson for the Liberal Democrats has written his speech on Third Reading on the back of an envelope?

Mr. Davey: Although the hon. Gentleman may need to print out the full text of his own speeches, some of us have only a few notes—to which we often do not even need to refer.
I was making a rather more serious point: there are some major tax changes in the Finance Bill, which one would have thought the Chief Secretary would mention. Perhaps he is rather embarrassed by them, and is not prepared to advocate them to the public—therein lies the truth. Perhaps the shadow Chief Secretary failed to mention them because he realises that the Conservative

Government began those reforms. He does not want to admit that the measures are the logical conclusion of Conservative tax policies.
The Liberal Democrats support those two historic tax changes. However, we do not support the way in which the money freed by the changes has been spent. The Government have spent the money in several ways, none of which will promote full social justice and fairness—as should have been done. They have followed the Tory route of cutting marginal tax rates. In taking that approach, they are making the same mistakes as the Tory Government made in the past; they are not targeting those freed-up resources on the working poor. That is an historic mistake.
The l0p tax rate will not help the poorest in society; it will be worth just as much to those on higher incomes. We could have taken hundreds of thousands of the working poor out of tax altogether, if the money saved by abolishing mortgage interest tax relief and the married couples tax allowance had been used to raise personal allowances. The Government failed to do that.
There was an extremely Tory policy in the Budget: cutting the marginal rate of income tax by a penny in the pound. That money could have been spent on public services; we could have improved our health and education services, using the money squandered by the Government in an unnecessary tax cut. Alternatively, the money could have been used to raise personal allowances. Unfortunately, the Government failed to take that opportunity. The Finance Bill fails to promote social justice.
To be fair to the Government, on Report, there were one or two concessions—on buses, bicycles and employee share ownership. We welcome that and we are grateful that constructive opposition occasionally bears fruit. Indeed, in Committee, we managed to delete the word "other" from one schedule. That clarified the law, for which I am sure the tax lawyers outside this place will be grateful.
However, those minor improvements have not improved the fundamental quality of the Bill. As the right hon. Member for Wells said, the Bill increases the complexity of the tax system. An allowance and a relief have been abolished, but in their place has come a l0p tax rate, which creates huge complexities because it means that we now have a multiplicity of tax rates on different sorts of income. People filling in their self-assessment tax returns will suffer headaches as they try to work it all out; many of them will have to pay hundreds of pounds for professional advice. As we enter an era in which we ask the average citizen to fill out a tax return, we ought to make the tax system more simple, especially for elderly people. As the Financial Secretary will recall, we debated that point early this morning.
Not only does the Bill fail the test of improving the tax system by promoting simplicity: it fails to enhance the fairness of the tax system. The Chief Secretary said that fairness was the Government's aim and that, through the working families tax credit and the 10p rate, they were achieving that. However, there are many other ways in which they could have achieved it, specifically, by raising personal allowances. In next year's Budget, the Liberal Democrats want a massive increase in personal income allowances that takes hundreds of thousands—even millions—of people out of the tax system altogether. It is


nonsense that people on low earnings pay income tax. We should return to a fairer tax system that does not trouble many low income earners with the attentions of the Inland Revenue. I hope that the Government will learn the error of their ways and that next year we will have a Finance Bill that increases simplicity and promotes fairness.

Mr. Edward Leigh: I shall concentrate on only one clause—clause 27—and the children's tax credit. In his Budget speech this year, the Chancellor made much of fairness. When introducing the children's tax credit, he said:
In the Budget last year, I set down the two principles that govern my approach: we must substantially increase support for families with children and we must do so in the fairest way. It is in fulfilment of those two principles that the children's tax credit will be tapered away for the higher-earning family where there is a top-rate taxpayer."—[Official Report, 9 March 1999; Vol. 327, c. 183.]
Fair enough—if the Chancellor intends to introduce a new children's tax credit in a fair way, there is nothing wrong with that. However, if we look at the Finance Bill, we find that that is not going to happen: the way in which the tax credit is to be implemented is not fair.
A couple in which one partner stays at home to look after the children or an elderly or dependent relative will find that their children's tax credit starts to taper away once the earnings of the partner in work exceed £32,000 a year, and that once that partner's earnings exceed £38,000 a year, no credit will be due. At first sight, that might appear to be perfectly fair—after all, we want to concentrate resources on those who are most in need. However, it is not fair, because a couple in which both partners are in paid work will continue to draw the credit in full until their joint income exceeds £64,000 a year, if each of them earns broadly the same amount as the other and they are not higher-rate taxpayers. What is fair about a system that pays a credit in full to one couple who together earn £64,000 a year, but withdraws it completely from another couple whose income is only £38,000 a year? I cannot perceive the fairness in that.
The children's tax credit is not to be introduced until April 2001. We cannot change this year's Finance Bill, because it is too late, so, looking ahead to 2001, my plea to Treasury Ministers is that they should reconsider that single aspect of the Bill and try to ensure that there is greater fairness in the system. All I am asking is that the Government treat each couple fairly. Surely, as a matter of principle, the Government should allow couples if they so wish—there is no compulsion—to live their lives in the way in which they want to. The Government should allow couples to pool their income and allowances for the purposes of calculating their entitlement to credit. That seems entirely fair.
In that case, the make-up of couples' incomes would be immaterial. It would make no difference whether it was wholly earned by one partner or earned by both—or in what proportion it was split between them. They are a couple, living together and pooling their earnings. If they choose to live their life in a certain way, why should they be penalised so heavily by the state? That is unfair and cannot be just. All couples should be given the opportunity to be treated exactly the same.
There is an even stronger case for my argument. The Government cannot reasonably argue that couples with higher incomes should not be given the opportunity to

pool their incomes for the purposes of CTC, since at the very same time under the working families tax credit, they are requiring people at the bottom end of the income scale to disclose to each other their incomes, savings and other details.
The CTC is seen by the Government as part of the benefits system. It is designed to help couples with children. In effect, it is a benefit, although it is termed as a tax credit. Indeed, it was introduced instead of further increasing child benefit. The Government are also considering integrating the CTC with the child premiums in income support and the working families tax credit. All that is fair enough; I do not have any argument with any of it. Does it not show that the Government view the children's tax credit as part of the benefit system?
We know that the basic unit in the benefits system is not the individual but the family—

Mr. Deputy Speaker: Order. The hon. Member for North-East Hertfordshire (Mr. Heald) must not keep passing to and fro in front of hon. Members who are addressing the House.

Mr. Leigh: I am sure that the Whip was trying to be helpful.

Mr. Deputy Speaker: Order. That is not the point. It should not be done.

Mr. Leigh: If the benefits system views the family as a unit, and the CTC is in effect a benefit, why cannot it be treated as such?
Are we to try to build a society that is fair, allows couples to live their lives and does not penalise a couple in which a wife, or possibly a husband, wants—I stress that there is no compulsion—to stay at home to look after the children? Such penalties are unfair and I plead with those on the Treasury Bench to reconsider.

Mr. Fabricant: This Finance Bill and the Budget statement are typified by the leaflet that was produced by the Treasury at a cost of more than £100,000 and distributed to more than 1.5 million people. This little leaflet is a distortion of the truth; the entire Finance Bill is a distortion of the truth.
The Budget statement made on the day by the Chancellor of the Exchequer gave all the good news and none of the bad news. It took journalists at least three or four days to read the Finance Bill and all the attendant literature in order to extract the truth. This has been one of the most dishonest Finance Bills before Parliament this century.
The Prime Minister and the Chancellor of the Exchequer have claimed that this Bill would reduce taxes. Yet the House of Commons Library, after detailed analysis, stated unequivocally that this Budget will raise £40.7 billion of extra funds from taxpayers. That figure is equivalent to £1,500 per taxpayer over the course of this Parliament. I am astonished that during the proceedings on the Finance Bill and at Treasury questions, Ministers have consistently denied that. At the end of the day, they are claiming that they are right and the independent


House of Commons Library is wrong. The Labour party is endeavouring to fiddle the figures, and that must be wrong.
Labour claims that it is in favour of hard-working families, but the Finance Bill has hit families by scrapping the married couples allowance. The abolition of the tax relief on mortgage payments will cost home owners more than £200 a year, and that is wrong.
The Budget has resulted in Labour taxing motorists off the road. We now have the highest petrol charges in Europe. The Government trumpet that they are in favour of green policies and have introduced the tax break of lower vehicle excise duty for vehicles below 1100 cc, but that is a joke. We all know that even a Fiat Punto's engine is over 1100 cc. That makes a mockery of all the Government's claims. Of course, we do not expect the Labour party to know about such matters. We all know that the Deputy Prime Minister owns two Jaguars, so what would he know about Fiat Puntos?
The Chief Secretary claimed that 10p was the lowest rate of tax, but we know that scrapping the 20p income tax band will result in a tax rise of £60 a year for most people. That is yet another distortion.
In conclusion, this Budget has been driven solely by the Government's desire to disguise the fact that they are raising taxes by stealth and by their desire to win the next election for the Labour party, but the Government underestimate the electorate if they think that they will be fooled indefinitely. The Finance Bill destroys the golden legacy inherited from the previous Government and sows the seeds of economic decline.

Mr. Loughton: If, after the long haul on this Finance Bill, there is one word that encapsulates what the Bill is all about, that word is stealth. Uncharacteristically, it was the hon. Member for Croydon, Central (Mr. Davies) who put his finger on that. This is the stealth tax Budget.
Throughout the proceedings on the Finance Bill, including this evening's debates, Ministers have boasted of the headline rates of income tax and corporation tax. Never once have they tackled the most important issue of the overall tax burden. As my hon. Friend the Member for Lichfield (Mr. Fabricant) rightly pointed out, the Library explicitly said that the overall tax burden—not the tax rates—of the Government's three Budgets will, over the lifetime of this Parliament, add £40.7 billion to the tax bill. According to the president of the CBI, there will be £20 billion of extra taxes on industry alone. That is from a Government who, in opposition, had no plans to raise taxes.
The British people are wising up to taxation by stealth. The fuel duty and so-called environmental taxes are the biggest red herring, painted green, in the Finance Bill. As we heard earlier, the Bill will destroy large swathes of this country's freight industry. The measures are counterproductive in terms of the revenue coming into the Treasury and in their effect on the environment. It took a great deal of questioning and requestioning to drag out, at long last, the admission from the Economic Secretary that the price of fuel under the Labour Government has increased by 13p per litre in excise duty. People who live in the country will feel the brunt of that. The disabled

who rely on their vehicles will also feel the brunt of that. Those who rely on community bus transport, who have no exemption from this tax, will feel the brunt of the increase in excise duty more than anyone else, through no fault of their own.
Environmental measures in the Budget that we applaud, like the 29 per cent. reduction in local gas charges, pale into insignificance without the kick-start that is needed through the capital tax reliefs for which we called. As a result, the reduction becomes meaningless.
The public are waking up to the highest fuel duty in Europe. It is all the making of the Government, when 85 per cent. of the cost of a litre or gallon of fuel is down to tax as per Government instructions in the Bill.
There is the stealth tax of the 10p rate of which we learn with great fanfares while nothing is said about the 20p rate that will be abolished, to be increased to 23p. There is stealth in that the 10 per cent. rate does not apply to people's savings. There is the stealth of the fact that the married couples' tax allowance is to be abolished, to be replaced two years later by the children's tax credit, which is no good if one's children happen to be older than 14. That is no good for prospective pensioners born after a certain date.
With the Finance Bill, the Government are all about giving with one hand with great fanfares and taking by stealth with the other. We have heard this evening about the biggest black hole of them all. There will be unlimited, unaccounted for and unaudited expenditure on the euro handover plan. So much power is being delegated through the Bill to secondary legislation, let alone what may be delegated to the superior powers of the code of conduct group, about which we hear so little.
This is government by stealth. It is government by presentation and headline rather than by practical implications and detail. It is a thoroughly dishonest Budget from a Government who are obsessed by spin, and we should vote against it.

Mr. Quentin Davies: We have had some very effective contributions in this debate. My hon. Friend the Member for Arundel and South Downs (Mr. Flight) spoke extremely persuasively about the stealth tax policy of the Government. That is the hallmark of the Government, of the Budget and of the Finance Bill, which I hope the House will shortly be rejecting.
My hon. Friend the Member for Lichfield (Mr. Fabricant) spoke with his usual vigour about how disingenuous the presentation of fiscal and economic policy has become under the Government. The Budget speech is no longer a serious occasion when the light and the shade, the pluses and the minuses are presented. All the unpleasant news is either entirely passed over in silence or is hidden with a few glib phrases supplied by a spin doctor from Millbank. Such has been the decline in our proceedings and in the standards of parliamentary presentation that the Government have sadly brought about.
My hon. Friend the Member for Gainsborough (Mr. Leigh) spoke extremely well about the children's tax credit. He is a recognised authority in this country on social security matters. I add only that the children's tax credit brings with it the extremely negative historic


achievement in our tax policy that it destroys the principle of independent taxation. That principle was introduced under a Conservative Administration in the 1980s by Lord Lawson, as he now is. That great achievement is the pillar of a fair and just tax system in a modern society. It is now being destroyed as a by-product of this ill-thought-through policy.
The hon. Member for Kingston and Surbiton (Mr. Davey) made a good speech, but confirmed that the Liberals are to the left even of the Labour party. They are the highest tax-raising party in the country. They are welcome to that position, and I hope that they enjoy it.
The most striking feature of the debate this evening was not the effective and often interesting speeches to which I referred, but the complete silence from the Government Benches. The most revealing—because it is entirely objective—aspect of the debate has been the utter failure of the Government to generate the slightest enthusiasm among their own supporters for their taxation measures and fiscal policy.
I remember that when I entered the House in the 1980s, I looked forward to intervening from the Back Benches in support of the momentous Budgets of the time. I was proud to do so. Not a single hon. Lady or hon. Gentleman spoke this evening from the Government Back Benches, and my goodness, we all know that there are far too many hon. Ladies and hon. Gentlemen on those Benches. We shall have to wait a couple of years to get rid of most of them. Not a single one could muster the slightest enthusiasm for the Government's proposals. Many of them must have had the greatest difficulty in hiding their deep embarrassment.
The cracks are appearing in the apparently bright facade of the new Labour Government. They are appearing in the areas of tax policy and economic management as much as, or more than, in any other field. Let us consider the growing rift in public expenditure between the Government's promises, to which my right hon. Friend the shadow Chancellor rightly referred—promises to spend more money on desirable public services such as health and education—and their total failure to deliver the other half of that commitment: to make savings in social security expenditure.

Mr. Christopher Leslie: Will the hon. Gentleman give way?

Mr. Davies: The hon. Gentleman has had plenty of opportunity to take part in the debate. He knows that I like taking interventions, including those from him, and I often take them, but it is a pretty poor show that Labour could not muster a single speaker tonight. Now, because Labour Members are so pained by my strictures, they put up the hon. Gentleman to try at the last minute—and after time—to remedy the obvious deficiency of the parliamentary Labour party in the debate. That will not wash. The hon. Gentleman will have to do better next time and get in during the debate, as he could so easily have done.
If a rift is appearing in the Government's public expenditure policies and the facade of new Labour, that facade is crumbling to dust on the revenue side of the Government's tax policies. We all know that their behaviour has been characterised by a series of stealth taxes. They started right away with the dividend tax

credit. We have lost count, but I am sure that someone in Conservative central office is keeping a record—he or she must be employed full-time adding the number of stealth taxes introduced by the Government.
Several of those stealth taxes were revealed in this evening's debate, not least that nasty little trick of bringing to an end the married couples allowance one year, then waiting a full year before introducing its supposed replacement, the children's tax credit, thereby taking hundreds of pounds surreptitiously out of families' pockets. What a sickening thing to do, when the Government continue with their rhetoric about supporting the family. They are doing no such thing. They are making an entirely cynical and opportunistic attempt to take money out of households with children while pretending to do nothing of the kind.
Many Government policies are in shreds.

Mr. Geraint Davies: Will the hon. Gentleman give way?

Mr. Davies: I have already explained why I will not—[Interruption.] I am sorry, but if Labour Members lack either the courage or the conviction to take part in debates on these important budgetary matters, and if they do not have a good word to say about the Finance Bill or the Government's tax proposals, I am afraid that I shall rub it in by deliberately not taking interventions from them. As the hon. Member for Croydon, Central (Mr. Davies) knows, I am making an exception by not taking interventions, but tonight's events have been striking. Although no hon. Member will have missed the significance of the silence of Labour Members on the Finance Bill, it is important that the public realise what is going on and how little conviction Government policy carries even among Labour Back Benchers.
The Government's taxation policies are already unravelling and many are in shreds. Only pigheaded obstinacy—or a desperate desire to save face at any price, including the national interest—is holding up the concessions that everybody knows are required and must be delivered. The Opposition have pressed for them during proceedings on the Bill. We must have a change in the annuity rule to get rid of the 75-year rule so that people's pension savings are not thrown away on an annuity that will accrue hardly more interest than that which they would receive from putting their money on deposit or in the gilt market. We must allow draw-down indefinitely and the Government must think again about our proposal to abolish the 75-year rule.
The situation in respect of personal equity plans and individual savings accounts has made the Government a laughing stock in every section of our society that follows financial matters. Every independent financial adviser in this country would endorse that. The Government came to power and destructively decided to get rid of extremely successful policies only to replace them with a colossal failure. The sooner they recognise that, and get rid of the mini ISAs in particular, the better.
As my hon. Friends have said so clearly throughout proceedings on the Bill, the Government have come to the end of the road on the fuel duty escalator as well. Increasing the rate to 6 per cent. was extremely foolish and unsustainable, and the escalator must go. Above all, they have come to the point at which they can no longer


defend what they are doing on personal tax. I made that point yesterday, and it is going to be made again tonight, but we have had not a single response.
What is the justification for taking hundreds of pounds out of the pocket of someone who has only £5,000 a year to live on? Last night, I referred to a case involving someone who had £1,000 taken out of his pocket and he has only £4,000 a year to live on because people below the income tax threshold are being made to pay tax on their dividend income. What is the justification for introducing a 10 per cent. lower rate of tax and not applying it to savings income? There is no justification in terms of economics or of basic good or evil. Nor is there a common-sense justification for what the Government are doing. They must think again, and it is obvious that their Back-Bench supporters think that they should do so as well.

Mrs. Roche: After that performance, let me assure the hon. Member for Grantham and Stamford (Mr. Davies) that I managed to hear his every word. I remember his record on Finance Bills from when I was in opposition, and it was very helpful to us. Given his views on Europe, he will continue to be of use to us.
I thank my hon. Friends on the Back Benches who so ably supported us and spoke so frequently in Committee—unlike Conservative Members, who, during their years in power, never spoke on Bills.
I want to correct a few of the comments made by Conservative Members. The right hon. Member for Wells (Mr. Heathcoat-Amory) alleged that social security spending is out of control. How wrong can he be? The forecast of real growth is 1.9 per cent. a year over this Parliament, compared with 4.1 per cent. during the previous Parliament. The rate has halved, but we are still providing extra resources for the poorest in society. Once again, that is absolute proof that a Labour Government are much better managers of the economy.
The right hon. Gentleman had the cheek to allege that savings were less attractive under a Labour Government. The real enemies of savers are instability and high inflation. The Government have no intention of returning to the sky-high inflation rates of the Tory Administration. The savings ratio fell to 3 per cent. in 1988 under the Tories, and we will not let them forget that.
The hon. Member for Lichfield (Mr. Fabricant) poked fun at the 1100 cc cut-off for vehicle excise duty. He had the temerity to call it a joke. Drivers of 1.8 million cars will benefit from a £55 cut in the annual VED, and they will not regard it as a joke—and neither will members of the public in the hon. Gentleman's constituency when he goes into the Lobby tonight to vote against the Bill.
The hon. Gentleman spoke about the road haulage industry. The total tax burden on UK hauliers is lower than that in other major EU states, and is below the EU average. The Government have been able to achieve that because we support business. [Interruption.] Conservative Members may mock, but we remember what happened to businesses when they were in power. Under the previous Government, a business went bust every three minutes.
The hon. Member for Gainsborough (Mr. Leigh) referred to the child tax credit and the taper. The taper works according to an individual's income, so if one

person in a couple is a 40 per cent. taxpayer, the taper will bite, but if neither of them is, they can each earn about £32,000 and the taper will not bite. During that debate, there was a split between the hon. Member for Gainsborough, who made a plea to abolish independent taxation, and the hon. Member for Grantham and Stamford who, only a couple of minutes later, made an even more passionate plea to save it. That is why we like the hon. Member for Grantham and Stamford.
The Budget builds on a strong foundation of economic stability, advances a modern framework of efficient public services and encourages a dynamic Britain of enterprise and fairness. That is what the country said when people heard the Budget proposed by my right hon. Friend the Chancellor. The Budget and the Finance Bill that implements it are about building a better Britain and a better economy for all our people. I commend the Bill to the House.

Question put, That the Bill be now read the Third time:—

The House divided: Ayes 326, Noes 149.

Division No. 226]
[10.54 pm


AYES


Abbott, Ms Diane
Casale, Roger


Adams, Mrs Irene (Paisley N)
Caton, Martin


Ainger, Nick
Cawsey, Ian


Ainsworth, Robert (Cov'try NE)
Chapman, Ben (Wirral S)


Alexander, Douglas
Chaytor, David


Allen, Graham
Chisholm, Malcolm


Anderson, Janet (Rossendale)
Clapham, Michael


Armstrong, Rt Hon Ms Hilary
Clark, Rt Hon Dr David (S Shields)


Ashton, Joe
Clark, Paul (Gillingham)


Atherton, Ms Candy
Clarke, Charles (Norwich S)


Atkins, Charlotte
Clarke, Rt Hon Tom (Coatbridge)


Austin, John
Clarke, Tony (Northampton S)


Barnes, Harry
Clelland, David


Barron, Kevin
Coaker, Vernon


Battle, John
Coffey, Ms Ann


Bayley, Hugh
Coleman, lain


Beard, Nigel
Colman, Tony


Beckett, Rt Hon Mrs Margaret
Connarty, Michael


Bell, Stuart (Middlesbrough)
Corbett, Robin


Benn, Hilary (Leeds C)
Corbyn, Jeremy


Benn, Rt Hon Tony (Chesterfield)
Cryer, Mrs Ann (Keighley)


Bennett, Andrew F
Cryer, John (Homchurch)


Benton, Joe
Cummings, John


Bermingham, Gerald
Cunliffe, Lawrence


Berry, Roger
Cunningham, Jim (Cov'try S)


Best, Harold
Curtis—Thomas, Mrs Claire


Betts, Clive
Dalyell, Tam


Blackman, Liz
Darvill, Keith


Blears, Ms Hazel
Davey, Valerie (Bristol W)


Blizzard, Bob
Davies, Rt Hon Denzil (Llanelli)


Boateng, Paul
Davies, Geraint (Croydon C)


Bradley, Keith (Withington)
Davis, Terry (B'ham Hodge H)


Bradley, Peter (The Wrekin)
Dawson, Hilton


Bradshaw, Ben
Dean, Mrs Janet


Brinton, Mrs Helen
Denham, John


Brown, Rt Hon Nick (Newcastle E)
Dismore, Andrew


Browne, Desmond
Dobbin, Jim


Buck, Ms Karen
Dobson, Rt Hon Frank


Burden, Richard
Doran, Frank


Burgon, Colin
Dowd, Jim


Butler, Mrs Christine
Drew, David


Campbell, Alan (Tynemouth)
Dunwoody, Mrs Gwyneth


Campbell, Mrs Anne (C'bridge)
Eagle, Angela (Wallasey)


Campbell, Ronnie (Blyth V)
Eagle, Maria (L'pool Garston)


Campbell—Savours, Dale
Edwards, Huw


Cann, Jamie
Efford, Clive


Caplin, Ivor
Ellman, Mrs Louise






Ennis, Jeff
Ladyman, Dr Stephen


Etherington, Bill
Lawrence, Ms Jackie


Field, Rt Hon Frank
Laxton, Bob


Fisher, Mark
Lepper, David


Fitzpatrick, Jim
Leslie, Christopher


Flint, Caroline
Lewis, Ivan (Bury S)


Flynn, Paul
Lewis, Terry (Worsley)


Follett, Barbara
Liddell, Rt Hon Mrs Helen


Foster, Michael Jabez (Hastings)
Linton, Martin


Foster, Michael J (Worcester)
Livingstone, Ken


Fyfe, Maria
Lloyd, Tony (Manchester C)


Gapes, Mike
Lock, David


Gardiner, Barry
Love, Andrew


Gerrard, Neil
McAllion, John


Gibson, Dr Ian
McAvoy, Thomas


Gilroy, Mrs Linda
McCabe, Steve


Godman, Dr Norman A
McCafferty, Ms Chris


Godsiff, Roger
Macdonald, Calum


Goggins, Paul
McDonnell, John


Golding, Mrs Llin
McGuire, Mrs Anne


Gordon, Mrs Eileen
Mclsaac, Shona


Griffiths, Jane (Reading E)
McNamara, Kevin


Griffiths, Nigel (Edinburgh S)
McNulty, Tony


Griffiths, Win (Bridgend)
Mactaggart, Fiona


Grogan, John
McWalter, Tony


Gunnell, John
McWilliam, John


Hain, Peter
Mahon, Mrs Alice


Hall, Mike (Weaver Vale)
Mallaber, Judy


Hall, Patrick (Bedford)
Mandelson, Rt Hon Peter


Hamilton, Fabian (Leeds NE)
Marsden, Gordon (Blackpool S)


Hanson, David
Marsden, Paul (Shrewsbury)


Harman, Rt Hon Ms Harriet
Marshall, Jim (Leicester S)


Heal, Mrs Sylvia
Marshall—Andrews, Robert


Healey, John
Martlew, Eric


Henderson, Ivan (Harwich)
Maxton, John


Hepburn, Stephen
Meacher, Rt Hon Michael


Hesford, Stephen
Meale, Alan


Hewitt, Ms Patricia
Merron, Gillian


Hinchliffe, David
Michie, Bill (Shef'ld Heeley)


Hodge, Ms Margaret
Milburn, Rt Hon Alan


Hoey, Kate
Mitchell, Austin


Home Robertson, John
Moffatt, Laura


Hope, Phil
Moonie, Dr Lewis


Hopkins, Kelvin
Moran, Ms Margaret


Hoyle, Lindsay
Morgan, Ms Julie (Cardiff N)


Hughes, Ms Beverley (Stretford)
Morley, Elliot


Hughes, Kevin (Doncaster N)
Morris, Ms Estelle (B'ham Yardley)


Humble, Mrs Joan
Morris, Rt Hon John (Aberavon)


Hurst, Alan
Mudie, George


Hutton, John
Mullin, Chris


Iddon, Dr Brian
Murphy, Denis (Wansbeck)


Illsley, Eric
Murphy, Jim (Eastwood)


Jackson, Ms Glenda (Hampstead)
Naysmith, Dr Doug


Jackson, Helen (Hillsborough)
O'Brien, Bill (Normanton)


Jenkins, Brian
O'Brien, Mike (N Warks)


Johnson, Alan (Hull W & Hessle)
O'Hara, Eddie


Johnson, Miss Melanie (Welwyn Hatfield)
Olner, Bill


Jones, Rt Hon Barry (Alyn)
O'Neill, Martin


Jones, Mrs Fiona (Newark)
Organ, Mrs Diana


Jones, Ms Jenny (Wolverh'ton SW)
Osborne, Ms Sandra


Jones, Jon Owen (Cardiff C)
Palmer, Dr Nick


Jones, Dr Lynne (Selly Oak)
Pearson, Ian


Jones, Martyn (Clwyd S)
Pendry, Tom


Jowell, Rt Hon Ms Tessa
Perham, Ms Linda


Kaufman, Rt Hon Gerald
Pickthall, Colin


Keen, Alan (Feltham & Heston)
Pike, Peter L


Keen, Ann (Brentford & Isleworth)
Plaskitt, James


Kemp, Fraser
Pollard, Kerry


Kennedy, Jane (Wavertree)
Pond, Chris


Khabra, Piara S
Pope, Greg


Kidney, David
Pound, Stephen


King, Andy (Rugby & Kenilworth)
Powell, Sir Raymond


King, Ms Oona (Bethnal Green)
Prentice, Ms Bridget (Lewisham E)


Kumar, Dr Ashok
Prentice, Gordon (Pendle)



Prosser, Gwyn



Purchase, Ken





Quin, Rt Hon Ms Joyce
Stoate, Dr Howard


Quinn, Lawrie
Strang, Rt Hon Dr Gavin


Radice, Rt Hon Giles
Stringer, Graham


Rammell, Bill
Stuart, Ms Gisela


Rapson, Syd
Sutcliffe, Gerry


Raynsford, Nick
Taylor, Rt Hon Mrs Ann (Dewsbury)


Reed, Andrew (Loughborough)
Taylor, David (NW Leics)


Reid, Rt Hon Dr John (Hamilton N) Taylor, Ms Dad (Stockton S)
Temple—Morris, Peter


Roche, Mrs Barbara
Thomas, Gareth (Clwyd W)


Rooker, Jeff
Timms, Stephen


Rooney, Terry
Tipping, Paddy


Rowlands, Ted
Todd, Mark


Roy, Frank
Trickett, Jon


Ruane, Chris
Turner, Dennis (Wolverh'ton SE)


Ruddock, Joan
Turner, Dr Desmond (Kemptown)


Russell, Ms Christine (Chester)
Turner, Dr George (NW Norfolk),


Ryan, Ms Joan
Twigg, Stephen (Enfield)


Salter, Martin
Vaz, Keith


Savidge, Malcolm
Vis, Dr Rudi


Sawford, Phil
Walley, Ms Joan,


Sedgemore, Brian
Wareing, Robert N


Shaw, Jonathan
Watts, David


Sheerman, Barry
White, Brian


Short, Rt Hon Clare
Whitehead,Dr Alan


Simpson, Alan (Nottingham S)
Wicks, Malcolm


Singh, Marsha
Williams, Rt Hon Alan (Swansea W)


Skinner, Dennis
Williams, Alan W (E Carmarthen)


Smith, Rt Hon Andrew (Oxford E)
Williams, Mrs Betty (Conwy)


Smith, Angela (Basildon)
Wills, Michael


Smith, Rt Hon Chris (Islington S)
Wilson, Brian


Smith, Miss Geraldine (Morecambe & Lunesdale)
Winnick, David


Smith, Jacqui (Redditch)
Winterton, Ms Rosie (Doncaster C)


Smith, Llew (Blaenau Gwent)
Wise, Audrey


Soley, Clive
Wood, Mike


Southworth, Ms Helen
Worthington, Tony


Spellar, John
Wray, James


Squire, Ms Rachel
Wright, Anthony D (Gt Yarmouth)


Starkey, Dr Phyllis
Wright, Dr Tony (Cannock)


Steinberg, Gerry



Stevenson, George
Tellers for the Ayes:


Stewart, David (Inverness E)
Mr. Keith Hill and


Stewart, Ian (Eccles)
Mr. David Jamieson.


Stinchcombe, Paul



NOES


Ainsworth, Peter (E Surrey)
Colvin, Michael


Allan, Richard
Cormack, Sir Patrick


Amess, David
Gran, James


Ancram, Rt Hon Michael
Curry, Rt Hon David


Arbuthnot, Rt Hon James
Davey, Edward (Kingston)


Atkinson, Peter (Hexham)
Davies, Quentin (Grantham)


Baker, Norman
Davis, Rt Hon David (Haltemprice)


Beggs, Roy
Dorrell, Rt Hon Stephen


Beth, Rt Hon A J
Duncan, Alan


Bercow, John
Duncan Smith, lain


Beresford, Sir Paul
Evans, Nigel


Blunt, Crispin
Faber, David


Body, Sir Richard
Fabricant, Michael


Boswell, Tim
Fallon, Michael


Bottomley, Peter (Worthing W)
Fearn, Ronnie


Brand, Dr Peter
Flight, Howard


Brazier, Julian
Forth, Rt Hon Eric


Breed, Colin
Fowler, Rt Hon Sir Norman


Brooke, Rt Hon Peter
Fox, Dr Liam


Browning, Mrs Angela
Fraser, Christopher


Bruce, Ian (S Dorset)
Gale, Roger


Burns, Simon
Gamier, Edward


Cash, William
George, Andrew (St Ives)


Chapman, Sir Sydney (Chipping Barnet)
Gibb, Nick


Chope, Christopher
Gill, Christopher


Clappison, James
Gillan, Mrs Cheryl


Clark, Dr Michael (Rayleigh)
Gorman, Mrs Teresa


Collins, Tim
Gorrie, Donald



Gray, James






Green, Damian
Rendel, David


Greenway, John
Robathan, Andrew


Gummer, Rt Hon John
Robertson, Laurence (Tewk'b'ry)


Hague, Rt Hon William
Roe, Mrs Marion (Broxbourne)


Hamilton, Rt Hon Sir Archie
Ross, William (E Lond'y)


Hammond, Philip
Ruffley, David


Hancock, Mike
Russell, Bob (Colchester)


Harvey, Nick
St Aubyn, Nick


Hawkins, Nick
Sanders, Adrian


Heald, Oliver
Shephard, Rt Hon Mrs Gillian


Heathcoat—Amory, Rt Hon David
Shepherd, Richard


Hogg, Rt Hon Douglas
Simpson, Keith (Mid—Norfolk)


Horam, John
Smith, Sir Robert (W Ab'd'ns)


Howard, Rt Hon Michael
Soames, Nicholas


Howarth, Gerald (Aldershot)
Spelman, Mrs Caroline


Jack, Rt Hon Michael
Spicer, Sir Michael


Jackson, Robert (Wantage)
Spring, Richard


Key, Robert
Stanley, Rt Hon Sir John


King, Rt Hon Tom (Bridgwater)
Steen, Anthony


Kirkbride, Miss Julie
Streeter, Gary


Laing, Mrs Eleanor
Stunell, Andrew


Lansley, Andrew
Swayne, Desmond


Leigh, Edward
Syms, Robert


Letwin, Oliver
Tapsell, Sir Peter


Lewis, Dr Julian (New Forest E)
Taylor, John M (Solihull)


Lilley, Rt Hon Peter
Taylor, Sir Teddy


Livsey, Richard
Thompson, William


Lloyd, Rt Hon Sir Peter (Fareham)
Tonge, Dr Jenny


Loughton, Tim
Townend, John


Luff, Peter
Tredinnick, David


MacKay, Rt Hon Andrew
Trend, Michael


Maclean, Rt Hon David
Tyler, Paul


McLoughlin, Patrick
Tyrie, Andrew


Madel, Sir David
Viggers, Peter


Malin, Hurnfrey
Wardle, Charles


Mates, Michael
Webb, Steve


Maude, Rt Hon Francis
Wells, Bowen


Mawhinney, Rt Hon Sir Brian
Whitney, Sir Raymond


May, Mrs Theresa
Whittingdale, John


Moss, Malcolm
Willetts, David


Nicholls, Patrick
Wilshire, David


Norman, Archie
Winterton, Mrs Ann (Congleton)


Öpik, Lembit
Winterton, Nicholas (Macclesfield)


Ottaway, Richard
Young, Rt Hon Sir George


Page, Richard



Paice, James
Tellers for the Noes:


Prior, David
Mrs. Jacqui Lait and


Redwood, Rt Hon John
Mr. Geoffrey Clifton-Brown.

Question accordingly agreed to.

Bill read the Third time, and passed.

Religious Minorities (Middle East

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Hill.]

Mr. James Clappison: I am pleased to have the opportunity of raising the important subject of toleration for religious minorities in the middle east, and shall deal with two particularly important issues affecting Iran: toleration of people of the Bahai faith, and toleration of the people of Iran's Jewish community. However, the subject goes wider than Iran, and I appreciate that there are also alarming reports of events in Iraq.
Before dealing with those specific concerns, however, I should like to make it clear that, when I speak of toleration, I am in no sense trying to lecture other countries or to assert that one set of religious or cultural values is superior to another. I should like simply to assert the importance of tolerating the religious beliefs of any minority in any society, whatever that society's political, cultural or religious basis.
In the United Kingdom, such toleration has been hard won over many centuries. Even today, sometimes, that toleration is not as complete as we should wish. I am certainly aware, not of persecution by the state, but of cases in which members of the Muslim community, for example, have suffered from harassment, intolerance and even physical attack, simply because of their religious faith. Therefore, I should like simply to assert the importance of religious toleration.
Many of my constituents are interested in the subject of religious tolerance. On a number of occasions, I have been approached by constituents of mine who are members of the Bahai faith. I know that the hon. Member for Montgomeryshire (Mr. Öpik) is anxious to mention the case of the Bahais, and that my hon. Friend the Member for Chesham and Amersham (Mrs. Gillan) is also very interested in the Bahai community. When Bahais in my constituency have come to see me, I have been impressed both by their character and by their gentle faith. However, in the middle east, especially in Iran, Bahais have faced particular problems of persecution.
Since 1979, more than 200 Iranian Bahais have been killed.

Mrs. Cheryl Gillan: Does my hon. Friend agree that there are difficult decisions for Bahais, who often have had to keep quiet about their problems for fear of recriminations and reprisals against their families in Iran?

Mr. Clappison: Yes—my hon. Friend makes an excellent point, which has been made also by Bahais to whom I have spoken. Her comment also underlines a report, in September 1998, by the special representative of the United Nations Commission on Human Rights, which detailed wide-ranging violations of the basic human rights of the Bahai community. The United Kingdom Foreign Minister who was dealing with the matter—the late Derek Fatchett, taking a characteristically robust stand in defending human rights—made appropriately robust statements on those violations. I am hoping for a similarly robust approach this evening.
I should like to draw particular attention to another immediate issue of persecution in Iran—the arrest of 13 members of the Jewish community in Iran on charges of espionage. This is a complex story. There have been changes in Iran since 1979, and the picture today is by no means a simple one. It must be said that members of the Jewish community in Iran are allowed to practice Judaism. They enjoy universal suffrage, and there is a representative of the Jewish community in the Iranian Parliament. There are elements in Iranian society and politics who take an enlightened view. It is important to give a balanced picture.
None the less, the background to this particular case is worrying. There has been persecution of members of the Jewish community in Iran since 1979 and the revolution in that country. At least 17 members of the Jewish community have been executed since then. Some of those executions have taken place recently—one in 1994 and two in 1996.
The 13 now under arrest are facing charges of espionage, a charge that carries the death penalty. There have been reports in some quarters that, at first, they faced charges relating to the sale of alcohol. Those are somewhat strange reports. Espionage has been linked to the consumption of alcohol in individual cases, but not to the sale of alcohol. Today, those people face the serious charge of espionage.
It is necessary to look at the character of those who have been charged with this serious offence to assess the credibility of the charge. That credibility is undermined when one takes into account that among the 13 people are rabbis and religious and community leaders—people of great standing in their community. That says something about the nature of the charges and the background to them. We should not give too much of a cloak of respectability to those charges.
I appreciate that those who are charged with the offences will face the Iranian judicial process, and I know that our Government have made certain representations about that process. We would want the people to receive fair and proper treatment under that process. However, I should like our concern to be expressed even more robustly, and I should like us to express concern at the fact that those people are being placed upon trial at all.
There has been a robust international reaction to the subject from France and Australia, among others. In Britain, Ministers are aware of the issues involved, and one Minister has met a delegation from the all-party inter-parliamentary council against anti-semitism. I appreciate that Ministers have taken an interest in that important subject.
I appreciate that this is a complex subject, and there is a complex background to it. I appreciate also that the Government will want a certain amount of flexibility in how they approach this matter. I urge the Minister to give an assurance that the Government will work in every possible way to protect the 13 people facing those most serious charges, and that they will do everything they possibly can, with their discretion, to bring about their release at the earliest possible opportunity. I hope that our Government will assert the need for toleration of this religious minority, and others, in Iran and throughout the middle east.

Mr. Lembit Öpik: First, I thank the hon. Member for Hertsmere (Mr. Clappison) and the Minister for allowing me to contribute to the debate.
I am not a Bahai myself, but I have come to know and deeply respect their values and traditions. As the hon. Member for Hertsmere said, they have a gentle character which is distinct and defines the nature of their faith.
With 300,000 members, the Bahais are Iran's largest religious minority. Unlike the Christian, Jewish and Zoroastrian minorities, they are not recognised as a religion by the Iranian constitution; as such, they are classified as unprotected infidels, and have no legal rights, even though Iran is a signatory to the international convention on civil and political rights.
The UN special representative to Iran, Maurice Copthorne, reported:
the situation of the Bahais has not improved; in some respects it has deteriorated".
In July 1998, Ruhullah Rawhani was executed for being a Bahai. Even now, 14 Bahais languish in Iranian prisons, four of them facing death sentences. Iranian Bahais are barred from taking degrees; they cannot hold state sector jobs; their marriages are not respected; and many have even had their businesses repossessed by the state. It seems that their burial sites have even been desecrated.
Iran has yet to honour in full the recommendations of the special rapporteur on religious intolerance, Abdelfattah Amor. His proposals would emancipate all Iran's religious minorities. If they were introduced in phases, as the Bahais have suggested, there would be no need for any changes in the Iranian constitution.
Britain has been a good friend to the Bahais. It backed the resolution condemning Iran at the 55th session of the UN Commission on Human Rights. It is my view that past action by our Government has helped considerably in the fight for decent human rights for Iranian Bahais. I ask the Minister to give an assurance that the Government will continue actively to help Iranian Bahais in both word and deed—thereby, we hope, putting an end to this terrible persecution.

The Minister of State, Foreign and Commonwealth Office (Mr. Tony Lloyd): I am grateful to the hon. Member for Hertsmere (Mr. Clappison) for raising this important subject, which concerns a fundamental matter of human rights. I want to place on record the Government's policy on religious minorities in the middle east, whose plight has been highlighted recently by the detention on espionage charges of members of the Iranian Jewish community. Promotion of human rights is central to our foreign policy and religious freedom is a fundamental human right. All hon. Members would share that view.
We take every opportunity, working with our European Union partners, to urge all states to pursue laws and practices that foster tolerance and mutual respect and to protect religious minorities against discrimination and intimidation, wherever it happens and whatever the religion of the individual or group concerned. We also regularly raise with the Governments concerned specific cases of religious persecution.
The human rights instruments of the United Nations set clear principles to be applied by states to protect the rights of everyone to freedom of thought, conscience, and religion. We are right to press all states, without exception, to adhere to those principles. Wherever possible, we aim to work with officials, religious leaders and non-governmental organisations at international and local level to promote mutual understanding and tolerance. Where the possibility of meaningful dialogue on human rights issues exists, I believe that it is the best way of achieving lasting improvements.
The human rights policy department of the Foreign and Commonwealth Office has recently started an informal consultation group to bring together a number of non-governmental organisations working for religious freedom. We use the group to exchange information not only about instances of abuse but about practical ways of tackling abuse and promoting tolerance. That is the longer-term agenda, but it is every bit as important as the necessary action that is taken in response to particular moments of persecution.
The hon. Members for Hertsmere, for Montgomeryshire (Mr. Öpik) and for Chesham and Amersham (Mrs. Gillan) all spoke about Iran. However, I recognise the point made by the hon. Member for Hertsmere. There have been some especially positive developments in Iran over the past two years, which should not be ignored and which bode well for the future.
The Iranian Government under President Khatami have undertaken a programme of significant change, which includes the enforcement of the rule of law, full facilitation of freedom of expression and a more open and co-operative foreign policy. Those steps should help to create an environment more conducive to the protection of individual rights and freedoms.
The Iranian Government have made significant progress with the programme. In particular, there is now an unprecedented freedom of debate in Iran, as most impartial observers recognise. The role of the press is increasingly prominent: it is becoming more open and critical and is having an impact, especially on the use of torture. We welcome and recognise those changes.
The effort to establish a civil society based on the rule of law has made progress as well. Democracy has been extended. The first local elections were held on 26 February, and showed overwhelming popular support for the reforms taking place in Iran. The Iranian Government are also steadily improving their relations with their neighbours, especially in the Persian gulf. That is a particularly welcome development. Iranian co-operation is vital for future stability in the region, but we must look at the country's record in the round, and I take on board what has been said about the two groups that hon. Members have mentioned.
I shall turn first to the question of the Jewish detainees. I hope that I can demonstrate that the Government have been active, bilaterally and through our multilateral arrangements and partnerships. Specifically, we and our European Union partners remain especially concerned about the recent detention of members of the Iranian Jewish community. We first became aware some weeks ago that a number of Jews had been detained without charge in Iran, but some time had passed since the detentions took place.
It was not easy initially to establish the truth amid the rumours circulating about what had happened. We have been in regular contact with the Agudas Israel organisation, both in the UK and, through our mission in New York, in the United States. We have also been in touch with the Board of Deputies of British Jews and with the other bodies and organisations that have drawn attention to these cases. The more reliable accounts now seem to indicate that 13 Iranian Jews have been detained. On 7 June, it became apparent, first through media reports from Iran and then officially, that they had been accused of espionage.
Before that news broke on 7 June, the German European Union presidency—representing all EU Governments—on a visit to Tehran on 20 May had already expressed the concern of member states at these detentions. That was followed up by a formal EU demarche in Tehran on 30 June. The Minister of State, my hon. Friend the Member for Ashfield (Mr. Hoon) made a statement on 10 June expressing the Government's strong concern about those detained. The Iranian ambassador was summoned on 1 July, when my hon. Friend pressed for a fair trial and access for visitors.
Many of our EU partners have taken similar action. Our ambassador in Tehran has also raised our concerns bilaterally with the Iranian authorities. We welcome one positive step—the Iranian Government's recent confirmation, following the arrests, that they accept responsibility for individuals of every religious persuasion in Iran, including specifically the Jewish community, which is officially recognised under the Iranian constitution. The constitution thereby guarantees them a fair trial. As my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs has said:
The Government condemn anti-semitism wherever it occurs"—[Official Report, 22 June 1999; Vol. 333, c. 915.].
That applies as much to Iran as to anywhere, and we shall continue to monitor the situation, and take further action as necessary.
Our priority will be action most likely to help those detained. This is more than a simple human rights issue, as it goes to the heart of president Khatami's declared objective of fully establishing the rule of law in Iran.

Mr. Clappison: The Minister will be aware that the Government have received a representation from, among others, Mr. Netanyahu, the former Prime Minister of Israel. The shadow Foreign Secretary, my hon. Friend the Member for Stratford-on-Avon (Mr. Maples), has asked the Government to make public their response to that contact. Will the Minister tell us something about that?

Mr. Lloyd: I cannot give the hon. Gentleman a response about the Government's position. Normal practice is that representations from individuals, of whatever background, are treated as confidential, and it is for individuals to make their representations known if they wish to. I shall, however, look into the matter, and may write or speak to the hon. Gentleman in due course.
I can confirm what was said by the hon. Member for Montgomeryshire about the plight of the Bahai community in Iran. Unlike the Christian community, the Jewish community and the Zoroastrian community, which have special protection under the Iranian constitution, the rights of the Bahai have no such protection. Their plight


has been of serious concern for some time, and it remains so. We and our EU partners have raised our concerns with the Iranian authorities on many occasions. I was grateful for the hon. Gentleman's remarks about the role played by our deceased colleague Derek Fatchett, who made his extremely forthright views on human rights known to the Iranian authorities.
Persecution of individuals on religious grounds is totally unacceptable, whether or not a group is recognised by the constitution. The United Nations Commission on Human Rights resolution on Iran, sponsored by the EU and adopted on 23 April, reaffirmed international concern about the situation. We supported the resolution, which clearly signals the concerns of the entire international community.
We and our EU partners have also raised individual cases of concern with the Iranian authorities, most recently the cases of Mr. Najafabadi and Mr. Dhabihi-Mugaddam, both of whom face the death sentence. We were told on 4 October that their cases were subject to review by the Iranian supreme court. To date the sentences have not been carried out, and we have been led to believe that they will not be. That is welcome, but we await certainty on that point.
We also raised our concerns about the arrests at the end of last year of members of the Bahai institute of higher education, which relates particularly to the point made by the hon. Member for Montgomeryshire about access to education. The concern of successive British Governments has been marked and continuous, and we shall continue to press it.
The hon. Member for Hertsmere referred to Iraq, and I can put religious tolerance into a wider regional context. Religious minorities in Iraq have long been subject to discrimination and oppression. Simple expressions of belief lead to fear of arrest or imprisonment, as has been recognised by the UN Commission on Human Rights which, in its resolution on Iraq earlier this year, called on the Government of Iraq to respect and ensure the rights of all individuals, irrespective of their origin, ethnicity, gender or religion.
One interesting feature is that the majority Shia community, which amounts to about two thirds of the population, is the most persecuted group in Iraq. Reports from the United Nations Special Rapporteur on Human Rights, Max van der Stoel, whose specific brief is Iraq, show a systematic policy of intimidation against the Shi'ite religious community. Amnesty International has drawn attention to reports from June 1998 when hundreds of Shia Muslims were arrested by security forces in

Karbala during processions to celebrate a religious anniversary. Scores of others were shot dead when Iraqi forces opened fire indiscriminately.
Mr. van der Stoel described the systematic attacks and assassinations of Shia clerics, such as the murder of Ayatollah al-Sadr in February, as part of a planned policy aimed at discouraging religious leaders from freely expressing their opinions and religious beliefs. Amnesty International believes that more than 100 Shi'ite clerics have disappeared since 1991.
The regime treats other religious minorities similarly, for example the Assyrian Christians, Turkomen and Yazidis, who all face ill treatment and repression. The fate of 33 members of the Yazidi community, for example, who were arrested in July 1996 remains unknown. Iraqi opposition groups have released documents that detail on-going ethnic cleansing of the Kirkuk region of its Kurdish and Turkomen residents. Similarly, in December, Iraqi tanks and troops entered an Assyrian village near Mosul, causing the inhabitants to flee.
I could continue at length, but time prevents the full record being established. As Max van der Stoel stated, the current regime has effectively eliminated freedom of thought, expression, association and assembly, in addition to the civil rights to life, liberty and physical integrity. There can be no doubt that, for the foreseeable future, the people of Iraq will not enjoy respect for their religious beliefs or their other human rights.
I thought that it was worth while establishing that contrast, not because we are sanguine about intolerance of religious minorities in Iran—of course we are not—but to point out that in the Iranian context we at least believe that we have the possibility of constructive dialogue. It is a dialogue that we will use forcefully. Sadly, I cannot tell the House that similar dialogue is possible with Iraq.
I reiterate to all hon. Members the central point that the Government are committed to a foreign policy that has human rights as its very essence. Of course, religious freedom must be one of the essentials. It is enshrined in international law and covenant and it is something that we as a Government will continue to pursue because we have a duty to do so.
I will contact the hon. Gentleman about Mr. Netanyahu and I am grateful to him for giving us the opportunity to have this important debate. While the House is not packed, its voice will be heard in Iran and Iraq and the message of concern and condemnation will spread much more widely than the small number of hon. Members here tonight would suggest.

Question put and agreed to.

Adjourned accordingly at twenty-seven minutes to Twelve o'clock.